HC Deb 29 November 1999 vol 340 cc39-121

[Relevant documents: The Trade and Industry Committee reported on the Draft Electronic Communications Bill in its Fourteenth Report of Session 1998–99, HC 862. Its Seventh Report, on Building Confidence in Electronic Commerce: The Government's Proposals, HC 187, and the Government's response thereto, contained in Promoting Electronic Commerce, Cm 4417.]

Order for Second Reading read.

Madam Speaker

I should inform the House that I have selected the amendment which stands in the name of the Leader of the Opposition.

4.36 pm
The Minister for Small Business and E-Commerce (Ms Patricia Hewitt)

I beg to move, That the Bill be now read a Second time.

When my grandmother left Britain nearly 100 years ago, it took her months to reach Australia, and it took months for her first letter to reach home. These days, a letter takes less than a week, but an e-mail takes less than a minute. That is just one small example of how our world is being transformed by electronic networks.

The Electronic Communications Bill will modernise our laws for the world of e-mail and the internet. It is just part of our strategy to make this country the best place in the world for electronic commerce.

Electronic networks—the convergence of communications and computing—are changing everything. They destroy jobs and create new ones at quite terrifying speed. Already in the United Kingdom, one in six people works for companies that did not exist five years ago. Networks have transformed global trade, creating financial markets in which billions of dollars are moved around the world daily. They are transforming manufacturing, allowing global teams of engineers to work around the world, around the clock, designing new products and testing them in simulation before the prototype is even built. They are transforming education, and they will certainly transform politics. Indeed, I must congratulate the hon. Member for Rutland and Melton (Mr. Duncan) on achieving a parliamentary first—an electronic petition. I am not sure whether the House is yet equipped to receive an electronic petition electronically—I fear not. When I saw the electronic petition in my in-box this morning, and when I saw "You've got mail", I confess that I was not thinking of the hon. Gentleman.

Our goal is clear. This country led the world into the first industrial revolution, and now we are determined to be winners in the new economy. Our strategy for that is also clear. We need modern, competitive markets that will enable the fast growth of electronic commerce; confident consumers with the skills and access to exploit the potential of the internet; and a leading-edge Government, who are exploiting to the full the potential of the new technologies to transform the ways in which we deliver services to citizens and citizens communicate with the Government.

Mr. Dale Campbell-Savours (Workington)

One of the biggest impediments to the use of the internet in my constituency, where incomes are generally low, is the cost. How can British Telecom retain the right to charge people at the current level and deny millions of people the access that we believe that they should have, and that is enjoyed by people in the United States of America and other countries? Can my hon. Friend reassure me that the Government are doing something about this? BT will hang on to its profits like grim death and concede nothing unless it is pushed.

Ms Hewitt

My hon. Friend is absolutely right about the importance of reducing internet access costs. I represent a similar constituency, and low-income consumers—indeed, all consumers—can already benefit at weekends and off-peak times from some of the lowest internet access charges in the world. The real difficulty arises with peak-time access. We need to get the costs of that down, and we need tariffs that allow unmetered access. Oftel has made it clear repeatedly that there is no regulatory barrier to that, and it is considering BT's recent proposal for a new wholesale pricing system. Today, Oftel announced a new consultation on the matter of digital subscriber lines in the local loop; tomorrow, it will announce its decision on local loop unbundling, and how it intends to progress on that matter.

Several hon. Members


Mr. Deputy Speaker (Sir Alan Haselhurst)

Mr. Brian White.

Mr. Campbell-Savours

My hon. Friend the Minister—

Mr. Deputy Speaker

Order. I hope that the Minister will assist me. When several hon. Members stand to intervene in her speech, it would help to know to whom she is giving way.

Ms Hewitt

I apologise.

Mr. Campbell-Savours

My hon. Friend the Minister said that there was no regulatory obstacle to getting costs down. However, BT is recognised to be the main provider: it has a real monopoly, and needs to be pushed. Costs will be reduced not because BT volunteers to lose some profits, but because the company will be required by Parliament to do so—even though we recognise that it is a private company. My constituents want the same free, day-time service from BT that internet users in America enjoy.

Mr. Deputy Speaker

I appeal to hon. Members to make short interventions, especially if they are repetitive.

Ms Hewitt

I have already made BT aware of my views, and of the Government's objective in this matter. However, I remind my hon. Friend that BT has to set interconnection charges that are fair. Because of that, prices are already coming down. A wholesaler unhappy with the interconnection price offered by BT can go to Oftel, which will make a determination in the matter.

Mr. Brian White (Milton Keynes, North-East)

Is not one of the problems the length of time taken by Oftel to come to a judgment? Can Oftel's investigations be speeded up?

Ms Hewitt

My hon. Friend makes an important point. Oftel is increasingly aware—as are Ministers—of the need to move in internet years, rather than in parliamentary or calendar years.

Mr. John Bercow (Buckingham)

In a speech given in Cambridge on 13 September, the Prime Minister said that the Government attach a great deal of importance to getting their policy on e-commerce right. What assessment has the Minister made of the recent survey showing that two thirds of e-commerce companies feel let down by the Government's proposals? What is her assessment of the verdict of Mr. David Grossman, of the distinguished solicitors firm Berwin Leighton, that the industry was "distinctly underwhelmed" by the Government's proposals?

Ms Hewitt

I am extremely sorry that the hon. Gentleman has not been listening to industry, but that is typical of Conservative Members these days. In fact, Bill Gates and Microsoft have already described the Bill as a model for Europe. In addition, Intel, IBM and other major industry players in this country have welcomed the Bill. I hope that the House will do the same.

The Bill will help us to get the market framework right. It will build trust in the authenticity, confidentiality and security of on-line transactions. It will confirm the legal validity of electronic signatures, a matter for which business has pressed urgently. It will enable us to modernise the statute book by allowing the Government to amend references to paper signatures, documents and records—there are about 40,000 such references so far—to include their electronic equivalents.

Dr. Stephen Ladyman (South Thanet)

Would it surprise my hon. Friend the Minister to know that the pharmaceutical industry, in which I used to work, has been pressing for that measure on electronic signatures since the mid-1990s? The Conservative Government of the time did nothing about it.

Ms Hewitt

I am grateful to my hon. Friend, who makes exactly the right point. I shall come to the record of the Opposition in a moment. The Bill is the product of extensive consultation, which finally began in the dying days of the previous Administration. In March 1997, the then Conservative Administration consulted on proposals to introduce a mandatory licence scheme for trust service providers, with mandatory key escrow. In April 1998, one of my predecessors, my hon. Friend the Member for Hornsey and Wood Green (Mrs. Roche), announced that we were abandoning the Conservative party's approach. In March, we consulted again on our voluntary approval scheme. In July, we published the draft Bill for further consultation.

At least some Opposition Members have abandoned the view that they held in government. The hon. Member for Esher and Walton (Mr. Taylor) said: I welcome the fact that the right hon. Gentleman has fileted from the previous draft of the Bill various aspects of the statutory trusted third party regime. I have recanted proposals that I made when I was a Minister".—[Official Report, 19 November 1999; Vol. 339, c. 241.] He was right to recant because, as he recognises, the policy of this Government has been quite different from that of our predecessors.

The Conservatives wanted a system of mandatory licensing for trust service providers. That was rejected by industry. We have always preferred a voluntary approval scheme. The Conservatives wanted a system of mandatory key escrow that would have required users of encryption to deposit copies of the keys protecting their confidential data to be lodged with a third party. We listened to business and industry and ruled that out in March. In May, we published a Cabinet Office study that confirmed that partnership with industry rather than mandatory key escrow was the best way to meet law enforcement concerns. Clause 13 explicitly prohibits key escrow requirements being imposed in any order made under the Bill.

Now the Conservatives tell us that they will oppose the Bill until the European Union has sorted out every issue to do with the framework of statutory regulation and private international law. I know that the Conservative party has lost touch with business and is obsessed with the single issue of Europe but, even for it, that is ridiculous. Increasingly, the Tory party reminds me of some of the computer games that our children seem to enjoy so much: Aliens 3, starring the hapless Leader of the Opposition; Quake 2—follow the latest upheaval in the Conservative party as it gets stuck further and further in sleaze; and Tomb Raider—await the return of the right hon. Member for Kensington and Chelsea (Mr. Portillo).

Mr. Andrew Miller (Ellesmere Port and Neston)

My hon. Friend mentioned Microsoft. Has she seen this morning's letter from its chairman, David Svendsen, congratulating the Government on introducing legislation that will serve as a model for Europe? Does that not contradict the position adopted by the official Opposition?

Ms Hewitt

Precisely so. If British people and British businesses are to win the benefits of electronic commerce, we need this Bill. We were determined to get the Bill right and to get it soon. We will achieve both goals.

Mr. Nick Gibb (Bognor Regis and Littlehampton)

Does the hon. Lady really think that she has delivered the Bill as soon as she could have? She said in a press release: We are determined to get e-commerce law right and to get it in fast. The Bill was in the Queen's Speech last year, but was not published in its final form during the period covered by it. Does she agree with the Labour-dominated Select Committee on Trade and Industry that the Government have been moving as fast as a glacier on this?

Ms Hewitt

That is a bit rich coming from a supporter of a Government who did nothing whatsoever about the matter until their final weeks. We made it clear that we want the Bill to achieve Royal Assent by next April. I have no doubt that we are on track.

Mr. David Heath (Somerton and Frome)

Does the Minister agree that, if regulation is to apply, it must be transparent and justiciable? Will she comment on the case raised by Article XIX in which the Lord Chancellor has closed a website simply because he does not accept that its content is appropriate or suitable? Will she ensure that, if the Government wish to take action against electronic communication, they do so within the law?

Ms Hewitt

I am not aware of the details of the case to which the hon. Member for Somerton and Frome (Mr. Heath) refers. The law applies on-line just as it does off-line; I am sure that he supports that.

I shall return to the European legal framework, but, first, I draw the House's attention to an important change that we have made to the Bill since the consultation draft. The draft Bill included provisions to modernise the powers of the law enforcement agencies. Those provisions are essential because, unfortunately, the internet is transforming crime as much as it is transforming commerce. It provides new opportunities for money launderers, for fraudsters and for those who trade in child pornography.

I am sure that all Members of the House agree that the police must have adequate powers to deal with such crime. If they have the power—under warrant, for example—to seize a suspect's files or to intercept his communications, they must also have the power, if those files or communications are encrypted, either to obtain the material in plain text or to obtain the key to decipher it.

Those measures were originally included in the consultation draft, but will now be included in the Bill for the regulation of investigatory powers, to be introduced during this Session by my right hon. Friend the Home Secretary and the Minister of State, Home Office, my hon. Friend the Member for Norwich, South (Mr. Clarke). Much of the response to the draft Electronic Communications Bill concentrated on those law enforcement measures. I know that my hon. Friend will consider that response carefully before the investigatory powers Bill is finalised. I also know that he will take into account the concerns of business—especially those of the internet service providers—as to the possible costs to them of those measures. Indeed, I shall ensure that their concerns are effectively and strongly represented to the Home Office. Furthermore, the Bill—like every Bill introduced by the Government—will be compatible with the Human Rights Act 1998. The debate on the Bill will give right hon. and hon. Members ample opportunity to discuss those important law enforcement issues.

The first aim of the Electronic Communications Bill is to build trust among consumers and businesses in the providers of trust services. There is widespread agreement as to the need for a kitemark, so that consumers and business alike can trust the providers of cryptography and confidentiality services. They need to be sure that messages will not be altered en route, that their credit card details will be kept secure and that their signature will not be misused. Our strong preference is for self-regulation, and I am working closely with the Alliance for Electronic Business, which is drawing up a self-regulatory approvals scheme. The alliance has made good progress; last Friday, I received an update, which I am urgently assessing. The proposals demonstrate the commitment of the industry to the self-regulatory approach—companies such as British Telecommunications plc, IBM and Royal Mail are involved.

Our policy is underpinned by the principle of co-regulation, which is especially suited to the world of the internet. Co-regulation means that the Government should define the public policy objectives, but that industry should deliver the solutions through self-regulation.

Mr. David Ruffley (Bury St. Edmunds)

Will the hon. Lady tell us when that new regime will be in place? Will she publish a timetable to tell us exactly when it will be finalised and up and running?

Ms Hewitt

During the passage of the Bill, I shall report on the progress made by the Alliance for Electronic Business, and shall try to publish a timetable for the introduction of the scheme.

The point of co-regulation is that legislation should be used only when self-regulation does not deliver. Part I thus provides a statutory default option. In July, we spelt out the criteria for a kitemark for this sector; they include a broad coverage of industry sectors and of its range of services, consumer representation, clear standards and the ability to ensure compliance and to meet EU standards so that British businesses and consumers can take advantage of the single market.

I am confident that self-regulation will work, but the industry is fast-moving, and self-regulation is at an early stage. It would be irresponsible to do what the Opposition appear to suggest—to abandon the possibility of a statutory scheme in future. The sensible course is to work with industry on self-regulation—as we are doing—but to create a statutory default option in case we need it.

Mr. Alan Duncan (Rutland and Melton)

By what criteria will the Minister deem a voluntary regime to have succeeded or to have failed?

Ms Hewitt

We have already published—and I just summarised—the criteria by which we shall judge a self-regulatory scheme. Once the Bill receives Royal Assent, we shall hold part I in reserve, in case self-regulation fails. Then, in 2004, we shall conduct an open review of how self-regulation is working; and, provided that it is working well, the powers in part I will lapse, according to the provisions of clause 15.

Dr. Nick Palmer (Broxtowe)

Can my right hon. Friend confirm that, even if a statutory scheme is introduced, it will still be open to any commercial provider who is not satisfied with the clauses to operate outside the scheme—that it will be statutory in the sense of a Government register but not in the sense of a compulsion?

Ms Hewitt

I am happy to give my hon. Friend the assurance that he wants. We rejected the mandatory approach that our predecessors had adopted, so any statutory scheme, were it to be introduced under part I, would still be voluntary.

Mr. Nick St. Aubyn (Guildford)

Would it not be more straightforward if the Minister, instead of putting propositions before the House now to save her face and that of her colleagues, admitted that her Department had made a mistake and that part I was not needed, but said that it would be possible later, if self-regulation was not working, to come back and justify the introduction of part I on the basis of the evidence available at the time?

Hon. Members


Ms Hewitt

The Opposition are in an extraordinary state. On one hand, we hear that we are not moving fast enough. On the other, we are told, "Do not do this. Find the parliamentary time and introduce a fresh Bill if we need it." It is much more sensible to take the approach that we are taking.

Part II confirms the legal validity of electronic signatures.

Mr. Ian Taylor (Esher and Walton)

I hope that the hon. Lady does not distinguish between me as the unofficial Opposition and Members on the Opposition Front Bench as the official Opposition in these matters. However, having been the Minister mentioned as having recanted, as it were, may I ask the hon. Lady to clarify two things? First, can she confirm what the Secretary of State for Trade and Industry told me on 19 November 1999—that the Home Office Bill for the regulation of investigatory powers will not override her desire for a voluntary system? Secondly, can she confirm that the Government, in their dealings with business and consumers, will not adopt a key escrow system? If they do, it may well become the de facto system that others will have to adopt.

Ms Hewitt

It is a pleasure to hear from the unofficial Opposition, and I am happy to reassure the hon. Gentleman on both the points that he raises. There is no suggestion of the Home Office, in its Bill, taking over the self-regulatory scheme that we are pursuing with the Alliance for Electronic Business or seeking to substitute its own powers for the statutory default powers in part I.

I repeat that mandatory key escrow has not been part of the Government's policy since March 1999. We have ruled it out from the Bill so that it cannot be introduced under part I or part II. Part II deals with the conditions on which electronic transactions may take place between Government and the citizen.

Part II—

Mr. St. Aubyn

On part I, what assurance can the Minister give the House that if, at some time before 2004, she conducts a review of how self-regulation is working, she will not at that stage have to introduce amendments to the Bill in the light of the fast-changing scene that we all know is represented by e-commerce?

Ms Hewitt

In a world that is changing rapidly, we have to try to make the legislation that we pass today as flexible and future-proof as we can. That is why the Bill is drafted on the basis of technological neutrality. It is not designed to prescribe, or to surround with conditions, any specific type of technology. That is very important in relation to the provisions in part II that will confirm the legal validity of electronic signatures.

Mr. Gibb

Will the Minister come to the House if she decides to invoke part I or will it be invoked through an order? Will the House have any say?

Ms Hewitt

I am happy to assure the hon. Gentleman that I would, of course, come to the House in those circumstances.

Mr. Gibb

Will the Minister give way?

Ms Hewitt

I shall give way one last time.

Mr. Gibb

The Minister has missed the point. As currently drafted, if part I is invoked, the Bill does not require a statutory instrument to be introduced under either the affirmative or negative resolution procedure. What assurances can she give the House that it will have a say and a vote on whether part I is invoked?

Ms Hewitt

I have just given the hon. Gentleman an assurance in what I thought was plain English.

Mr. Duncan

It was ambiguous.

Ms Hewitt

It was not ambiguous. If the hon. Gentleman wants to pursue the point in Committee, I am sure that we can spend many a happy hour on it.

Part II also gives Ministers the powers to update the statute book by providing electronic equivalents to paper signatures, records and documents. Lawyers argue about whether electronic signatures would be recognised as valid by the courts, but we cannot afford to wait while lawyers argue and the courts decide. Instead, clause 7 will allow businesses and consumers to have confidence in electronic signatures, because it puts beyond doubt that a court can admit evidence of an electronic signature and a certificate in support of that signature not only to establish from whom the communication came, but to establish the date and time at which it was sent and whether it was intended to have legal effect.

Mr. Tony Baldry (Banbury)

Will the Minister help the House by explaining when clause 7 will be implemented? What is the timetable?

Ms Hewitt

I anticipate that clause 7 will come into force immediately that the Bill has secured Royal Assent. I think that the Select Committee on Trade and Industry, of which the hon. Gentleman is a member, particularly supported this measure.

As some of my hon. Friends have said, the proposals for electronic signatures have been widely welcomed by industry. For example, Intel said that it was delighted that government … is focusing on the real issue of legal recognition of electronic signatures which will give a vital boost to business and consumer confidence". We also have to modernise the statute book to enable electronic transactions between citizens and government, and between citizens themselves, to take place. Clause 8 will therefore give the Government and the Scottish Administration the power to sweep away obstacles in existing laws that insist on the use of paper and formalities, such as sealing and—if my hon. Friend the Minister for Competitiveness will forgive me for mentioning it—the requirements to deliver documents through the post. The clause will give people the option of using electronic means when they prefer to do so.

I am pleased to announce that my right hon. Friend the Minister of State, Cabinet Office has agreed that the Cabinet Office's central information technology unit will now co-ordinate the use of that power to ensure the equivalence of electronic and paper ways of doing business with government. We want Departments to use those powers quickly, and the Cabinet Office will lead the drive across government to ensure that that happens.

Mr. Ian Taylor

I am grateful to the Minister for giving way twice to me. Can she assure me that there will be consistency across government in putting those powers into practice? Will the Inland Revenue and Customs and Excise join everyone else, or will they devise their own systems?

Ms Hewitt

The hon. Gentleman makes an important point about the need for consistent and open standards across government and the Cabinet Office will certainly continue in that co-ordinating role. The Inland Revenue and Customs and Excise have already taken the power in the Finance Act 1999 to conduct their own modernisation of their relevant statute book. I am delighted that the Inland Revenue will shortly offer on-line tax filing for businesses and individuals as will Customs and Excise for VAT filing.

The Department of Trade and Industry will use the power that we shall obtain under the Bill to amend company law, so that companies can communicate electronically with shareholders and so that shareholders can lodge proxies, including voting instructions, on-line. Such measures will save the companies and shareholders that take advantage of them significant sums of money. I therefore propose to publish a draft order for consultation early in the new year, so that it can be introduced and take effect as soon as the Bill receives Royal Assent. I shall announce other plans to make use of clause 8 powers during the Bill's parliamentary passage.

Part III modernises the out-dated system for modifying telecommunications licences. There is widespread agreement in the industry that a more flexible and responsive approach to licence modification is essential. I have to say, however, that the industry was unhappy with our proposed mechanism, particularly the proposal that the Director General of Oftel should be able to make modifications without a reference to the Competition Commission, despite objections, provided that those objections did not constitute a significant minority. Following our discussions with the industry, we have considered that proposal further and decided not to proceed with the "significant minority" concept.

We are continuing to discuss possible alternatives with the industry. As I informed Opposition Front-Bench Members earlier this afternoon, I should like to make it clear that I will table amendments in Committee to simplify our proposals and ensure that they command wider support.

We have to get right our own legal framework, and we are doing so, but we also have to get right the European and global frameworks, and we are working to do that too. There is a very big prize to be won in the European Union—a single market for electronic commerce. Tomorrow, at the European Union Telecommunications Council, we shall adopt the electronic signatures directive. That sets out a legal framework for EU-wide recognition of electronic signatures, the establishment of approval schemes for service providers and the liability of providers. We are anticipating the directive in the Bill, and I am surprised that the official Opposition have not congratulated us for doing so, instead of carping in their amendment.

The next priority is to complete the electronic commerce directive. As drafted, the directive enshrines the principle of the trader's country of origin. In other words, a British company complying with British regulation should be able to sell on-line to consumers in any other member state. We believe that that is the right way to legislate for electronic commerce.

Over the past year, the Brussels convention has been under review. As hon. Members will know, that convention governs the issue of which court can hear a private law dispute between residents of different member states, including disputes about certain consumer contracts. The European Commission has now prepared a proposal to convert it, with amendments, into a community regulation.

The Brussels convention has existed for 31 years and, in that time, almost no consumer has used it to sue for breach of contract. None the less, the Commission sought to extend its provisions to electronic commerce by providing in a draft recital that any website that could be accessed from another member state would thereby qualify as advertising directed at consumers in that member state and could activate the convention's provisions. That, of course, misses the point that, on the internet, any website is, by definition, accessible from anywhere else. I am pleased to be able to tell the House that there is growing agreement among member states with our view that the new recital should be dropped.

We anticipate review next year of the Rome convention, which deals with the issue of which jurisdiction takes effect in private international law. We shall play a full part in those discussions, but we cannot possibly wait until they are resolved to introduce the electronic commerce directive or the Bill. Instead, we need to put forward our own proposals to ensure effective protection of consumers in the world of e-commerce.

It is consumers, above all, who stand to benefit from e-commerce. Price transparency will be a boon to consumers throughout the European Union and beyond. I welcome the fact that at least one leading car manufacturer has already announced that it will sell its own models on the internet throughout the European Union, and I know that others are planning to follow suit.

Mr. Derek Wyatt (Sittingbourne and Sheppey)

This is a terribly interesting issue. Where will European, American and Japanese car manufacturers pay corporation tax and VAT? Is there a European understanding of how that will work with sales on the internet?

Ms Hewitt

My hon. Friend raises an extremely interesting point. I refer him to an excellent discussion paper on that subject, which was published by the Inland Revenue last Friday. In any case, there is a clear set of EU rules governing VAT liability. Those have not given rise to problems as they have been translated into the sphere of electronic commerce.

We have to ensure that consumers are protected from unfair dealing on the internet; they need to know which suppliers they can trust. That is why we are working with consumer groups to develop TrustUK as a hallmark, to ensure that consumers are given clear and fair contracts, truthful advertisements and clear and accurate information about what they are buying, prices, delivery costs, the returns policy, and so on. We can now work with our European partners to create a TrustEurope equivalent, building on the provisions of the new distance selling directive.

Dr. Palmer

Will the kitemark be available to companies based elsewhere that want to operate within the European Union, or will it be restricted to companies based within the EU, initially within the UK?

Ms Hewitt

We envisage that the TrustUK mark will be available to companies that sign up to approved codes of practice that provide both proper consumer protection and effective alternative means of dispute resolution. The issue is not where the company is based, but whether it offers proper consumer protection through an effective code of practice and effective dispute resolution mechanisms.

The Bill will be Britain's first 21st century law. It was the first Bill referred to in the Queen's Speech; it was the first to be introduced; and, tonight, it will become the first to receive Second Reading. It will bring our statute book into the 21st century, provide a sound legal basis for electronic commerce and electronic government, and help to build consumer and business confidence in trading on the internet.

The Conservatives' opposition to the Bill provides further evidence of how out of touch and out of date they are. While they remain stuck in sleaze, we shall legislate in the interests of the country as a whole. While they are stuck in the past, we shall legislate for the future. I commend the Bill to the House.

5.12 pm
Mr. Alan Duncan (Rutland and Melton)

I beg to move, To leave out from "That" to the end of the Question, and to add instead thereof: this House declines to give a Second Reading to the Electronic Communications Bill because it introduces a completely unnecessary element of regulation in the supervision of electronic commerce which will damage the United Kingdom's lead in this field and because no proper consideration has been given to the manner in which United Kingdom law will interact with impending EU law, in particular with regard to the jurisdiction that will govern electronic trade. I should do the House the courtesy of drawing its attention to my interest, which is fully registered in the Register of Members' Interests.

We are dealing not with some sort of techno-fad but with an important matter that increasingly affects the lives of millions. We are in the middle of a fantastic technological revolution and the Opposition accept the need for an element of legislation to facilitate that revolution's advance. Britain has a golden opportunity to put itself well ahead of the game, but the Government's slow handling of the issue risks relegating us from the premier league to the second or third division. There is a strange division between those who, faced with that revolution, champ at the bit and those who remain completely bamboozled. The revolution offers information, communication and trading networks, but the Bill is primarily concerned with the third category—electronic commerce.

E-commerce is a much misunderstood term. Despite forest-loads of hype, many outside the world of information technology retain a vague notion that e-commerce has something to do with selling books and CDs over the internet and with dull brochures and junk mail served up on screen instead of posted through the letter box. The commercial internet is still in its infancy, but it is growing prodigiously. Only six years ago, Europe was considered an internet backwater, with a mere 200,000 computers connected to it; now, 50 million Europeans are believed to be connected. The "Computer Industry Almanac" predicts that, by the end of 2000, 327 million people around the world will have internet access. It is forecast that that dramatic increase in the number of people on-line will lead to an explosion in global e-commerce revenues: one report estimates 183 million on-line buyers spending more than $1 trillion by 2003.

Impressive as those figures are, I would argue that they partly miss the point about what e-commerce is. It is not only about massive numbers or about who is or who is not making a profit on-line. It is about how this fledgling technology can transform entire industries and enable companies to reach markets that were previously unattainable. It is also about saving money by moving core business processes on-line, such as customer service, shareholder communication, procurement and supply-chain management. Above all, it is about creating and experimenting with new business models such as Priceline, which lets consumers suggest their own price for everything from new cars to holidays and mortgages, or about computer companies that allow customers to configure their own personal computers on-line and use sites that offer direct access to the travel industry's computer database.

E-commerce is also about the way in which companies re-engineer their businesses. Encyclopaedia Britannica International Ltd, no longer employs salesmen to lug heavy tomes from door to door. Instead, it sells student subscriptions to its multimedia website to colleges and universities around the world.

Britain can and must be the nerve centre of the worldwide business revolution. This is a world in which there is a mini revolution every week. British businesses will not forgive us if we do not act fast and with a clear head. [Interruption.] In one respect the Government seem to support the same objective—they talk as though they share that objective. As in so many other areas of policy, they have adopted convincing language. In his speech at Cambridge, the Prime Minister said that we need to be quick on our feet. Some might think that he has been quite busy off his feet recently. However, the Government have not been quick off their feet because the Bill has been a very long time coming. Anyone who has paid any attention to the progress of the Bill knows that it has been the product of a messy turf war between the Department of Trade and Industry and the Home Office, which have been squabbling for more than two years. The Bill was promised last year but it never came.

Dr. Ladyman

Perhaps the hon. Gentleman will enlighten me by explaining how his call for more speed ties in with an amendment that calls for less speed.

Mr. Duncan

The reasoned amendment calls for less legislation. It was completely misrepresented by the Minister when she said that the Opposition are calling for nothing to be done until everything has been done in Europe. Rather, we are saying that Britain should proceed now, but in a simple way with a shorter Bill that is not so cumbersome and laden.

It is the Government who have taken their time. They have said for years that they will appoint an e-envoy. At last they have got round to doing so, but he will not be at his desk until January.

Mr. White

If the hon. Gentleman is so concerned about speed, why did not the Opposition agree to a carry-over motion in July and table amendments in Committee? Their objective could have been achieved in that way.

Mr. Duncan

I shall specifically address that issue.

It is hardly surprising that the Government have been so slow. Although they talk much about IT and about how they believe in it, their track record in implementing it in their own house is abysmal. Much of what they try to do in government immediately crashes.

The essence of the internet revolution is that it divides clearly into e-government and e-commerce. The internet is a fantastic mechanism for improving the delivery of government. That is certainly what the Government say, but in practice everything that they touch crashes. About 500,000 people had to wait for a passport in the summer because computers would not work. The Inland Revenue could not properly implement its new system of self-assessment, and a crash led to the absurdity of 56,000 people receiving an apology for being sent the wrong sort of threatening letter.

The Government may speak the language of IT, but in practice their IT crashes. As if that were not enough, they set themselves a target. In 1997, the Prime Minister pledged that 25 per cent. of Government services would be available electronically by 2002. An inter-departmental audit of Government dealings soon afterwards found that 38 per cent. of them were already capable of being conducted electronically. Perhaps the Government think that a target that takes them backwards is easier to achieve.

Worst of all, the Government, pretending that they favour IT and the great internet revolution, plan to introduce IR35—a £500 million e-tax that would drive people abroad. The supreme irony is that those who helped to create the technology to produce the e-signature for which the Bill provides will face a sustained attack from a Government who say one thing and do another.

The Minister was kind enough to refer to the e-petition that I electronically signed this morning. We started it on Friday and we had thousands of names by Sunday evening. Many more thousands came in today, at the rate of one every five seconds at its peak. This is the first electronically signed petition. I look forward to the electronic reply, which I trust the Minister will send in due course.

The Secretary of State, however, is a little slow off the mark. As I walked into the Chamber this afternoon, I saw on the board a press notice informing us that in a week the Secretary of State will become the first British Cabinet Minister to become a digital signatory. He is a little behind the times, and in internet time a week is a decade.

Ms Hewitt

I am grateful to the hon. Gentleman for giving way. As he has collected so many signatures on the subject of IR35, will he tell the House whether he believes that an IT subcontractor earning £18,000 a year should pay the same level of national insurance contributions as a nurse or a teacher on £18,000 a year, or whether, as some—some—who wish to evade tax would suggest, that person should be able to escape paying any national insurance contributions at all?

Mr. Duncan

The Minister knows perfectly well that those who are employed as a limited company are doing so legally and that she is replacing their ability to help Britain lead the internet revolution with a £500 million tax, which will be detrimental to Britain's future and to theirs.

Several hon. Members


Mr. Duncan

I give way to the hon. Member for Broxtowe (Dr. Palmer).

Dr. Palmer

On a point of order, Mr. Deputy Speaker. I came to the Chamber in the belief that we would be debating electronic communications and commerce. We seem to be debating tax. Is that in order?

Mr. Deputy Speaker

I have heard nothing out of order so far.

Mr. Duncan

It seems that the Labour Government are about to add insult to injury. According to The Independent on Sunday, not only are they driving thousands of people out of Britain by taxing them more, to the tune of £500 million, but it seems that they are to give visa exemptions so that people from overseas can come into Britain if they can add to the IT revolution. How does the Minister square kicking people out with bringing them in with special exemptions?

Mr. Mark Todd (South Derbyshire)

I thank the hon. Gentleman for giving way. Would his party reverse the change if it were in government?

Mr. Duncan

I am sure that, unlike the Labour party, we will stick to what we say in the run-up to an election.

Mr. Campbell-Savours


Mr. Miller


Mr. Duncan

I shall give way in a moment, but I want to make some progress.

The Government have been unable to get their house in order and have made a complete hash of e-government. In contrast, our approach to e-commerce is entirely clear. We believe in minimum interference.

Mr. Miller

Before the hon. Gentleman leaves the issue of the petition, will he confirm that the website from which the petition was derived has been up and running for several months, and that it is not the instantaneous vehicle that he claimed? Will he answer the question from my hon. Friend the Minister? What would he do about the national insurance contributions of IT contractors on £18,000, as opposed to those of nurses on £18,000?

Mr. Duncan

I am happy to confirm to the hon. Gentleman that we collected all the names over the weekend.

Mr. Miller


Mr. Duncan

I defy the hon. Gentleman to disprove me. We announced the petition on Friday and received 1,700 signatures over the weekend and a further 2,000 this morning, witnessed by many people. Even in the 20 minutes during which I held a press conference this morning, a further 387 signatures came in.

Mr. Campbell-Savours


Mr. Duncan

I will not give way to the hon. Gentleman.

The Government invited us to allow the e-commerce Bill, as everyone believed it was called, to be introduced in the last Session and carried over. We rightly refused because we were not prepared to aid and abet the passage of a dog's dinner of a Bill, which would have been burdensome and detrimental to the progress of the revolution that we support. We knew the Bill's main contents and we were not happy. At least we thought that key escrow had been rejected and I was pleased to hear the Minister confirm that today. However, only a few groups were adequately consulted in a secretive, cosy process. The Minister shakes her head, but the Government did not properly consult small, infant companies, which are at the cutting edge of the progress that we support. The consultation process concentrated on the larger, established companies.

We forced the publication of the Bill in July; the Minister was not prepared to publish it. All companies, large or small, had the summer in which to consult the Government only because we refused to allow the carry-over procedure, and demanded the Bill's publication. Our efforts gave them that opportunity.

Ms Hewitt

I am surprised that the hon. Gentleman has chosen to reveal discussions that took place through the usual channels. However, as he has done that, I emphasise that we published the draft Bill for consultation because we believed that that was the right way to proceed. We made it clear that we wanted to introduce the Bill; we published it and we have now introduced it.

Mr. Duncan

I mentioned the matter only because it was raised during the Minister's speech. I am puzzled about how the Minister could have published the Bill for consultation if she had already laid it before Parliament. We forced its publication. Interforum, which probably represents the largest group of companies in the sector, stated: Although the consultation document is titled 'Promoting Electronic Commerce', some of the provisions in it could actually put the UK at a competitive disadvantage. At that stage, Interforum said what we were saying: We advocate a simple e-commerce Bill containing part II," — the provision for electronic signature— a four-page Bill genuinely designed to help the development of e-commerce in the UK. It continued: Far from promoting the UK as the best place on earth to trade electronically, the Bill is dominated by provisions which will make it more cumbersome to set up services in the UK, rather than elsewhere.

Mr. St. Aubyn

Does my hon. Friend agree that if the Government had presented a short Bill in the summer, it would have been relatively easy to have got it on the statute book already?

Mr. Duncan

My hon. Friend is right. If the Government had done as we requested, and presented a short, simple Bill, it could have been close to being enacted by now. However, the Bill that they published for consultation caused many anxieties, especially about the extent of the powers of intrusion, which would have been granted under part III of the draft Bill. Only a few weeks ago, I argued from the Dispatch Box that part III should be removed. The Minister looked across the Chamber and scoffed at me as if to say that that was an absurd demand. However, in my typically tactful fashion, I demanded its removal again. Now, lo and behold, part III has evaporated. The Government accepted the Opposition's sensible, constructive demands. The Minister relented and part III has been removed. We backed business; business backed us; the Minister backed down.

Part I remains a mess. We believe that the industry is best equipped to set standards, and that it can be relied upon to do so. We do not need Government interference in the process.

Part I is confusing and muddled. It is part statutory, part voluntary and, during the Minister's speech, the hon. Member for Broxtowe (Dr. Palmer) described the absurdity of companies not being compelled to participate, should its provisions be invoked. It is not needed at all. Indeed, the measure, which is part of a Bill for a fast-moving sector of the economy, is designed not to be used. It is designed as a dodo—it will lie on the statute book, extinct. She hopes that she will never have to invoke it, but, even today, has been unable to say under what criteria she might decide to invoke it.

The whole point of part I is that it is bound to be overtaken by events and rendered obsolete by technological advance. At least there is a sunset clause, but I suggest that it would be better to invoke it now and not have part I at all. The Minister will perhaps have seen from her own mailbag—as I certainly have and many other hon. Members will have today—that the Law Society recommends the total removal of part I.

The Bill contains some unsatisfactory elements. There is, lying within it, the prospect of a completely new regulatory office. Will it be called Ofcrypt or Ofweb? Who knows, but provision exists for detaching control of the regulatory regime from the Minister and passing it to some new body designed to regulate the internet. The last thing that the internet needs is an interfering regulator.

Mr. Wyatt

If Britain is to be the fastest-growing e-commerce country, is not it important that consumers feel confident about how we trade on the internet? If there is to be not a statutory body but a partnership with the internet community, we in the House have to enable that to happen so that consumers can feel confident about using websites. If we do not do that, they will not use them.

Mr. Duncan

No such interference is necessary when there are so many well-established companies connected to the internet that can set their own standards and prove to consumers that they are worth using. The Government do not need to interfere and the partnership to which the hon. Gentleman refers would simply lead to them slowing the development that we want. Indeed, because it has taken them two years to produce the Bill, those companies are already being dragged back in a way that, otherwise, they would not.

Dr. Ladyman

I am grateful to the hon. Gentleman for giving way to me a second time. When he reads what he has said, I wonder whether he will realise that he has proposed a policy that would exclude all new and small companies from using the internet as a way of trading. He is saying that the only firms in which people should have confidence are existing reputable businesses. Surely he cannot seriously be telling us that.

Mr. Duncan

The hon. Gentleman wilfully misunderstands me. Plenty of companies are already established in the industry and they could set up a voluntary regime in which all could participate. The Government do not need to interfere—they would be a brake on progress. Indeed, the whole point of part I—even to the Minister, as she would say—is that it is designed not to be used. I am merely pointing out the absurdity of including a provision that is designed not to be used and, I hope, never will be.

The kernel of the Bill is part II—Provision for electronic signature, which is all that the industry needs. It wants to know that there will be a proper legal framework within which a person can contract with another and that the contract will stand up in law. As the Minister rightly said, in many examples a handwritten signature is required—in many cases, it must be witnessed by someone else—but as the world advances it should be possible to achieve such verification and signature electronically. That is what the industry needs, and that is all that it needs, which is why we would have fully supported, even in the previous Session of Parliament, an e-commerce Bill that provided for electronic signature.

Dr. Palmer

As I understand it, the hon. Gentleman believes that, at this stage, we should not provide for a statutory register, no matter how disastrously a voluntary scheme might fare. He admits that we are in a new area. Does he think that past precedents—for instance, on BSE, which was caused by a similar lack of regulation—are encouraging?

Mr. Duncan

The Minister has just said that she is confident that self-regulation will work—so am I. I am pleased to find common ground with her. We could expedite the passage of the Bill if she would base her thinking on the comment that she made, and proceed with the Bill without this unnecessary provision, which will be a brake on progress.

Everyone recognises that part III is a bolt-on extra. Any provision that is retrospective, as the amendment of telecommunications licences would be, gives cause for concern. We reserve judgment on that. What matters is that existing licence holders are not disadvantaged. I am grateful to the Minister for explaining to the House that she will consult more widely and that she intends to remove some parts of the Bill in Committee. We are getting nearer to the four-page Bill that we would like.

A broader issue that affects not only this Bill but others is the language in which it is drafted. Any hon. Member who reads it from cover to cover will see that some parts of it are pretty incomprehensible and unintelligible. It is not an easy Bill to understand. As legislators, many of us would like our style of legislative language to be made simpler.

Mr. White

indicated assent.

Mr. Duncan

I see that the hon. Gentleman agrees. Legislation in Australia and the United States is in much simpler language. A sentence such as the enactments relating to the functions of that body or office shall have effect as if the functions of that body or office included the functions specified in the appointment makes us wonder how people reading the Bill will know the rights and wrongs of what they plan to do. I hope that I shall have support from both sides of the House if I join the Campaign for Plain English on the drafting of our law.

There is also concern about the loose and extensive nature of the secondary powers that the Bill grants. Many of them are vague and ill-defined. Some broad and unspecific matters are left to the Minister's whim. We shall consider that in more detail in Committee, but it is a point of principle that the secondary powers granted in the Bill go too far. Bills should be written in simple language. As my hon. Friend the Member for Banbury (Mr. Baldry) said, it is a matter of principle that hon. Members will want to scrutinise anything that emerges from the Bill, particularly something as significant as whether to introduce a voluntary regime—although it is fair to say that, under the Bill, that matter would have to come before the House in a statutory instrument.

Another area gives cause for concern. I am not saying that we should not proceed until everything is agreed in Europe—quite the opposite. I believe that we should proceed rapidly in the simplest possible form, while keeping more than an eye on what is happening in Europe. I detect an element of confusion in the Government about how they will handle European legislation. I welcome what the Minister said about the nature of the directive, which was that the country of origin of the sale shall be the jurisdiction of the law that will govern the transaction. She also said that there is great pressure in the European Union for a different code to govern internet transactions.

There is much confusion. As the Minister knows from what I said to her in European Standing Committee C, I am concerned that she and her fellow Ministers in the Department of Trade and Industry are saying one thing, but her colleagues in the Lord Chancellor's Department are saying another. We will not tolerate it if a small or even a large company in Britain that sells goods over the internet to another country is suddenly subject to the law of that country unreasonably.

The position becomes all the more confusing when geography becomes less and less significant, because the same person can plug in, wherever he is in the world, and enter into a contract via his laptop. Where that contract was executed must be clear, and the arrangements must be fair. I am glad that the Minister is going to press for the European Union recital to be dropped, and I hope that she will report to the House when she has been successful.

Our position is straightforward: we want a short, simple Bill. We do not believe that part I should be in the Bill. We believe that part II is the kernel of the Bill, and is essentially all that is needed. We believe that part III must be watched very closely, and we will ensure that there is no unfairness among existing telecommunications licence holders. If the Minister prunes the Bill and prunes it sensibly, making it a short, sharp, effective measure for the benefit of those who want to trade electronically, we will support her; but if she introduces other burdens that prove to be a drag anchor on such progress, we will oppose her.

5.41 pm
Mr. Andrew Miller (Ellesmere Port and Neston)

In my brief intervention on the speech of the hon. Member for Rutland and Melton (Mr. Duncan), what I was trying to say about IR35 was that anyone with an ounce of technological know-how would have worked out how to generate that kind of signature response in a few days. If the Conservative party had not got that far in its use of technology, woe betide it. All the names have been in the public domain for several months, following a web campaign on the subject. I agreed with the hon. Gentleman on one point, to which I shall return later.

The language in which the Bill is drafted reflects a broader weakness in the way we conduct our legislative arrangements in spheres in which technology is driving our thought processes.

For the benefit of hon. Members who have not yet experienced the web, let me illustrate just how powerful the tool might be. Last night, when reading the paperwork relating to the Bill, I thought that it might be fun to pick a name at random from the list of Opposition Members to demonstrate the power of the web in accessing information. It took me a few minutes. There was a list under "A"; I used an old piece of technology, the pin, which identified the word "Aldershot". I then looked at the web connections relating to the hon. Member for Aldershot (Mr. Howarth). I have put a note to the hon. Gentleman on the board, telling him that I was going to raise this.

The local website for the hon. Gentleman's council—a very good website: www.hart.gov.uk—tells us that the local MP has joined a War on Waste with a pledge to compost his garden waste at home. There are instant connections, not from there but through a search list under the hon. Gentleman's name. The website of The Freedom Association, of whose council the hon. Gentleman is a member, is www.tfa.net, and that linked me, via a number of extraordinary areas, to a site that is partly in the public domain and partly an e-commerce site. It showed, at the heart of the search for that one name, a company called Astra Holdings.

Those of us who have been in the House for some time will remember all those areas, but the exercise showed the power of this research tool. It can link areas of work that we have never been able to link by any other means.

The hon. Member for Rutland and Melton started his speech in a way that we all find ourselves forced to do in the context of the web. We see asymptotic curves, talking about billions of dollars of potential commerce, processing power, or take-up of the web. All that may be a little hackneyed, but it is true. The problem that we face is legislating on something that is moving so rapidly. No hon. Member can do more than guess at the scale of the growth of e-commerce over the next 10 years. The phenomenon equally applies in other areas of scientific and technical evolution. In my short time here since 1992, those developments have included digital broadcasting—I served on the Bill that provided the framework for that—and human genetics, on which the Select Committee on Science and Technology, of which I used to be a member, worked. Like the information technology revolution, such developments are moving so fast as to render legislation potentially out of date before, with the greatest respect to my hon. Friend the Member for Milton Keynes, North-East (Mr. White), the ink is dry on the vellum.

In the case of e-commerce, the Government have tried to use the collective wisdom of the nation by publishing a draft Bill, a procedure that the House should use more often. In sectors such as electronic communications, I commend to the House the use of witness examination at the Committee stage, so that, at the point of coming to detailed decisions, we are as up to date as possible about the technologies that impact on us. That will not solve the problem of keeping up to date, but it will at least give us an opportunity to be up to date on Third Reading.

I recommend that the Government avoid something that happened in several sectors under the previous Administration. The hon. Member for Rutland and Melton referred to procurement processes. The biggest weakness in those procurements was that they were technology-based, rather than designed to provide solutions. When looking at technologies, we need to use the best brains both in industry and in academia to deal with the impact of generic technological evolutions, rather than to focus on particular boxes.

To a certain extent, the Bill achieves that. I congratulate Ministers on their foresight and on the way in which they have addressed some of the difficult problems, but I make some observations on what is not in the Bill, rather than what is. I shall not stray too far because I know that you, Mr. Deputy Speaker, would want me to concentrate on the content of the Bill.

It is clear that we will have to come back to some of these issues, but it will be at the expense of Great Britain plc if we are not careful and do not get things right first time. Just remember those asymptotic curves that I mentioned earlier—the Bill is about how fast we will get to the near vertical slope predicted. If we get it wrong, who knows what disadvantage we will create for businesses in the United Kingdom.

The next point is specifically targeted at the little Englanders among Conservative Members. Without international agreements and partnerships, we might as well pack up now. The growth of e-commerce will be more important at the next GATT and World Trade Organisation discussions than the price of Canadian wheat ever was. Perhaps that is not a profound statement today, but few hon. Members accepted it when I made that prediction five years ago.

Essentially, the main principles of such international agreements should be no different from those on which all trade works: trust. All good trade works on the basis of that. If the hon. Member for Rutland and Melton and I decided to enter into an agreement with each other, I suspect that the degree of trust would be limited. I would want to see his goods; he would want to see my money. As trade develops, trust is increasingly built into the relationships. We currently use intermediary vehicles such as credit cards to help us establish those processes. We need to make it possible for electronic signatures to be used for verification. The nations that move furthest and fastest on that will be in a position to succeed.

Ideally, the codes to provide vehicles for trust should be established on a voluntary basis, but if that fails they will have to be statutory. The relationships involved will be a 21st century mail order protection scheme. We need to establish that principle worldwide. Hallmarks such as TrustUK, which my hon. Friend the Minister for Small Business and E-Commerce mentioned, will give the individual or trade consumer confidence that their goods will be delivered on time and at the agreed price and quality and will give the supplier confidence that the money will arrive on time, to the correct value and in the right currency. Nation states have an interesting role to play. The complex question of taxation has been mentioned and needs to be considered carefully.

Self-regulation can work and I believe from my discussions with industry that the will exists to deliver it.

Part I of the Bill deals with cryptography. The Government were right to rule out a mandatory key escrow, not least because it is the most unintelligible phrase ever to appear in the House. I suspect that very few people here, let alone outside the House, could explain what it meant. I hope that the Conservatives will look a little beyond the horizons of the green Benches to consider the interests of Great Britain plc and will support the principle that we have adopted. We need to send out a gentle warning to all our industrial partners. It would clearly be improper for any company that is a provider at any level to stand in the way of the legitimate needs of the police and criminal investigation authorities. Such companies should remember that their shareholders have children who are targets of paedophiles and drug barons. Of course industry should try to remain on the leading edge, and we want to help in that, but companies should not forget their responsibilities.

Mr. Richard Allan (Sheffield, Hallam)

I sympathise with what the hon. Gentleman says about responsible cryptography providers co-operating with law enforcement agencies, but I hope that he is not suggesting that part I is about law enforcement. My understanding is that nothing in part I should be related to law enforcement, because those issues are to be dealt with in another Bill.

Mr. Miller

I am referring to the context of the Bill as a whole. I take the hon. Gentleman's specific point, but in the general picture, while we give British companies and players in the field the advantages of being on the leading edge, we must send out a gentle warning that their shareholders also have children who are targets of those to whom I referred.

Criminals will continue to exploit the net. I gave away some web addresses earlier, but there are others that I am not going to specify. I did a search a few years ago in the wake of the awful Oklahoma bomb, when it was suggested that white supremacists were involved. Some of the information that I uncovered in the public domain on the web was outrageous. I do not think that any Member of Parliament would associate himself with some of the views that I unearthed. It is up to society as a whole to decide where the line is drawn and it is up to all of us in the House and outside to bring to book those who cross it.

Mr. Ian Taylor

There is too much confusion about the key escrow system, which is often associated only with the problems of the Home Office trying to track criminals. Key escrow, public-private key infrastructures and the use of asymmetric cyphers are all valuable tools for industry for purely commercial reasons. When I introduced a mandatory key escrow system, there was a lot of industrial support for it. Time has gone on and I have already recanted—I do not have to keep doing it. However, we should not talk about criminality every time that key escrow is mentioned. We also have to understand the serious commercial interests involved.

Mr. Miller

I have a great deal of respect for the hon. Gentleman's judgment on many of these issues.

Mr. Wyatt

He should come and join us.

Mr. Miller

There are several issues on which the hon. Member for Esher and Walton (Mr. Taylor) should come and join us, not the least of which is Europe. I take his point that we should not automatically link key escrow simply with issues of criminality. There are broader issues involved. His point is well made.

Part II deals with electronic signatures. I am not a million miles adrift from the hon. Member for Rutland and Melton—for once—in seeking an assurance that the nature of the signature required by any parties to a contract will be driven by the needs of the parties, not simply by the needs of the state. The state clearly has a legitimate role through its various agencies, but just as parties to any civil contract have arrangements that are acceptable to them in pen and ink—or whatever other vehicle they use; perhaps a shake of hands—the state should not seek to interfere in the process, but should aid it by helping to set standards and directing people to where such standards can be found.

The reasoned amendment says that we should decline to give the Bill a Second Reading because it introduces a completely unnecessary element of regulation in the supervision of electronic commerce which will damage the United Kingdom's lead in this field". The only aspect of that on which I agree with the hon. Member for Rutland and Melton is that the United Kingdom has a lead in the field. We have that lead because the Government's general policy has helped to build a framework that assists such development. That is adequately recognised in several large company responses to the proposals. Dell—a company that I hold in high regard—says in its submission: Dell welcomes the Government's decision to move away from the use of key escrow and third party key holding. Dell supports efforts to establish a self-regulating, non-statutory accreditation scheme for Trust Service Providers. Dell welcomes the removal of the proposal for a rebuttable presumption of validity for electronic signatures. Dell proposes that electronic signatures should be recognised as completely satisfying the requirements of UK statutory law, which have been traditionally fulfilled through the mediums of paper and writing. That is not dissimilar to the points I just made.

I referred earlier to Microsoft and the letter I received from David Svendsen, the chairman of Microsoft in the UK, in which he set out a number of bullet points. He strongly supports the Bill's prohibition on the imposition of key escrow by Government Ministers … strongly supports the Bill's granting of legal recognition and admissibility to all electronic signatures … believes that the Bill's approach to allowing electronic fulfilment of written and paper requirements in UK law needs to be strengthened". Again, that touches on a point that I made. Mr. Svendsen supports the Government taking powers to establish a voluntary approvals scheme for cryptography service providers. Finally, he congratulated the Government on introducing legislation that will serve as a model for Europe". That was from the largest IT company in the world—indeed, probably the largest company in the world.

Mr. Allan

At the moment.

Mr. Miller

Perhaps the hon. Gentleman is thinking of my next sheaf of papers, which is from amazon.com.uk. He may have an insight that I do not have. However, similar notes of accord have been coming in the post over the past few days.

The hon. Member for Rutland and Melton would have been right had we been debating the Bill as originally proposed, as some of his points were those raised by industry at that time. It is a pity that the hon. Gentleman did not catch up by recognising that the Government have moved positively in partnership with business, commerce and industry—not just in the UK, but worldwide.

I welcome the Bill, and I hope that my minor observations can be debated in Committee. I hope that we get the Bill rapidly on to the statute book to ensure that Britain remains a lead player in this important area of business and commerce.

6.3 pm

Mr. Ian Taylor (Esher and Walton)

At last—this is the most elephantine pregnancy ever. In the dim and distant past, I was the Minister who started on this process in 1995. Now we have the Bill, and the Home Office has been seen off, thankfully. I congratulate the Minister on achieving something that I did not achieve. To put that into context, I had an achievement in terms of the Internet Watch Foundation. That was a self-regulatory body, created when the Home Office was ready to pounce in the absurd legislative way that only it knows.

I would like the Minister for Small Business and E-Commerce to pass on my congratulations to her officials, many of whom were full of enthusiasm in 1995. I hope that they still are, although I am less than sure. Nevertheless, they have done a remarkable job in seeing the Bill through its various periods of gestation.

I declare the interests which are in the register. From time to time, I am asked to advise companies, and I am a director of one or two technology companies. If it is thought that the benefits to the UK that the Bill will bring will also benefit them, I will be delighted to have declared my interest in that context.

It is difficult to remember the atmosphere when we proposed the ideas of key escrow and trusted third parties. I came across a delicious quotation from Janet Street-Porter, now the editor of The Independent on Sunday—bless her heart. Back in those days of 1996, she said: Forget the superhighway, get a life. The future isn't wired. In fact historians will look back on the 1990s and the current surge of techno-hype and net-euphoria as a bizarre blip, a meaningless cul-de-sac in the cultural story of the 20th century. That will not make me rush out to buy The Independent on Sunday. Nevertheless, somebody has to be that wrong.

Mr. Miller

Does the hon. Gentleman agree that the problem that he had in the previous Administration was that that was precisely the view of that Administration?

Mr. Taylor

The House, as always, was full of wisdom on those occasions—it just did not happen to understand what I was saying. That was the problem.

It might have been a good job that the House did not understand. Since then, the National Security Agency in the United States has genuinely become a hate figure. In 1998, the plot of a film called "Enemy of the State" revolved entirely around the NSA murdering a politician who was trying to bring in a Bill with powerful encryption. I hope that no one gets that sort of encouragement, because we cannot afford to lose any politicians from the Conservative Benches—we have few enough as it is.

In principle, I welcome the Bill. It is difficult for a Government, and the Minister should be humble in one respect. The rate of progress since 1997 has not been as fast as many of us would have liked. In addition, it is dangerous for a Prime Minister to put so much emphasis on the importance of an e-envoy, only to find that the e-envoy does not take up his post for about 18 months. In fact, the e-envoy will not start until 1 January.

There is a problem in translating the fine words used by the Prime Minister and across Government into effective implementation—that is what the industry is looking for. In that context, I hope that the Minister will indicate when the 60 recommendations of the "e-commerce@its.best.uk" report, from the pen of Jim Norton and his committee, are to be put in place. What is the action plan for that? In many cases, they are ahead of what we think the Government's plans are. That is important, particularly in terms of education. The Department for Education and Employment still talks as if it has not read the report.

I hope that the Minister will use her undoubted charm, but also steel, to make sure that other Departments understand what is going on. I shall give her a tip in a spirit of co-operation—she should use powers which are trans-departmental to make an impact on the Government's understanding of e-commerce. I had those powers in the scientific sense, as Science Minister, and I arrogated to myself the powers in the technology sense. She must do the same if she is to be effective, and if any of the report's action plans are to be put in place. Somebody has to browbeat other Government Departments and Secretaries of State to apply them.

There is still a degree of confusion, which is not clarified by the Bill, about whether internet service providers are common carriers or are to be more responsible for the content that they carry. It is a complex matter, and I know only too well that there has been much thought about it. However, I would be grateful if the Minister would remove the uncertainty. She should continue, with Oftel, to look at the problem of unmetered calls. I will try to clarify this point. If I do so wrongly, I am sure that the Minister will assist the House by pointing out why.

The difficulty with unmetered calls is not the willingness of companies—although one should watch BT carefully, because if it were to introduce very low-price or even free calls that were in a sense subsidised by its other activities, it would be eliminating competition rather than spurring it on—but the need to protect poorer people, who would by definition probably face higher than normal subscriptions.

The hon. Member for Workington (Mr. Campbell-Savours) over-emphatically attacked BT, which was unfair, but he missed the point that unmetered calls are often attached to a service with a monthly or quarterly subscription. The consistent policy of this Government and the previous Government has been to try to ensure that the subscriptions are kept low, because of the problems of poor people. The clash between the subscription levels and the unmetered calls is one of the obstacles that Oftel is still wrestling with. It is a pretty intractable issue.

Ms Hewitt

The hon. Gentleman raises an important point. It is precisely for that reason that we do not want a single pricing model—nobody with any sense wants that—that would require low-income low users to pay very high subscription charges. It is perfectly possible to have a range of tariff models, as we already have for mobile telephony, to enable low-price or unmetered internet access calls, especially at peak times.

Mr. Taylor

I endorse that point. The competitive market—the result of the Conservative Government's policies—enabled that to happen.

I want to be naughty to the extent of saying that I believe that the Secretary of State's recent referral of the Cable and Wireless-NTL deal was a mistake. It broke the pattern of encouraging substantial competitors to grow in the marketplace. Growth in the cable industry has been based on an aggregation of franchises. The reference gave the wrong signal to the market. We want more competition, not less.

Mr. Wyatt

On access to the internet for poorer communities and families, does the hon. Gentleman agree that a good precedent was set when we took £3 million from television licence receipts to subsidise the creation of the Open university?

Mr. Taylor

There is a huge opportunity to be innovative. The hon. Gentleman is one of the more innovative Government Members. Perhaps one day Oftel will take the Independent Television Commission within its bosom and we will get a more rational debate.

Others have emphasised the importance of the on-line world. The figures are hard to verify and can be approximate, but we know that there are about 11 million internet users in the United Kingdom, with 11,000 joining each day. Many more people have access to the net, at work, home or school—about 18.6 million is 40 per cent. of the population. The critical mass is already with us. The rate of growth is astronomical.

Andersen Consulting's figures show that the value of the European internet market could be $430 billion by 2003, with 170 million users, as against $19 billion this year. That represents a growth in the European market from less than 20 per cent. of the size of the United States market this year to 60 per cent. by 2003, which shows how dynamic the European single market is.

There is further expansion because the internet is not a personal computer monopoly. Digital television is moving ahead dramatically, and most exciting of all are the wireless applications and the delivery of messages to mobiles. They are slightly taut messages in stretched second-generation digital but on third-generation mobile we will get the full multimedia impact.

Someone asked what we were doing in the dark, distant days before history began—meaning the previous Government. We were preparing the auctions that the Minister is about to launch. The auction arrangements were already thought through by the Conservative Government, but the trouble with the processes of government is that they move so jolly slowly. They had to move more slowly than we would have liked because of the need to get international agreements on what are known as the UMTS arrangements, so that the system, when it came, could be truly global.

Mr. White

The hon. Gentleman made such proposals in government but Opposition Front Benchers are now vehemently against them, which shows how far out of touch they are.

Mr. Taylor

The Opposition's job is always to oppose, whatever the justification. I am not on the Opposition Front Bench, for reasons that we will not go into.

It is important to understand what the Minister thinks she is signing up to in the e-commerce directive—which is based on host-country legislation, as she rightly said—because I understand from a senior member of Directorate-General XV that there are some specific caveats, for example concerning moves by any country to protect its consumers that are justified by public policy or public security. They are pretty big caveats. I hope that we will get some clarification before we sign up because one can drive a coach and horses through home-country control with such caveats in place.

I pressed on the Minister the need to have a trans-departmental authority. She should ensure that home-country control under European directives also applies to the Financial Services and Markets Bill, clause 19 of which creates concerns about the powers taken to regulate internet sites outside the United Kingdom. The conflict needs to be reconciled. There is no doubt that the financial services market is becoming global. I am glad to say that both the Corporation of London and the Worshipful Company of Information Technologists welcome the Bill and are determined to ensure that London plays its full part. We must be careful to base both British and European legislation on sound principles that encourage e-commerce rather than restraining it.

The alarming skills shortage both in the United Kingdom and in the European Union as a whole could hold back many of our good efforts to stimulate the growth of e-commerce.

The Government should show leadership. It is no good for the Prime Minister to say—correctly—that companies that are not entirely on-line in five years' time may well be out of business, when the Government's own target for providing their services on-line is only 50 per cent. by 2005. Is the logical extension that the Government themselves will be out of business by 2005? I doubt that they are saying that, but that is the logic of the situation. There is no excuse for not pushing ahead more quickly.

Mr. Miller

The hon. Gentleman must distinguish between businesses that need to be at the leading edge and Governments who have to provide services to consumers who currently have limited access. There is a chicken-and-egg argument there, and clearly the Government needs to take action to encourage the growth of access, but it would be improper for them to seek to deliver all their services on-line if all our citizens are not fully wired.

Mr. Taylor

That is an admirable but not very powerful contribution. The reality is that the Government have to act as a catalyst. The dates set are too lax and the targets set are not realistic. It is as if a large company were to announce that within a year no member of its supply chain would be accepted unless it were capable of dealing on-line in all aspects of its business. Those companies affected get on-line if they want to stay part of the supply chain. Perhaps the hon. Member for Ellesmere Port and Neston (Mr. Miller) should talk to the Minister about innovative ways in which public-private partnerships can finance moving to on-line status.

The Secretary of State for Trade and Industry and the Minister have reassured me about the risk that the regulation of investigatory powers legislation that is proposed would undermine what the Department of Trade and Industry is trying to do with this Bill. I take the Minister's word that it will not, and I am more relaxed on the subject.

I also welcome the sunset clause in part I, although I agree with my hon. Friend the Member for Rutland and Melton (Mr. Duncan) that part I is an intrusive element in the Bill. Given that it is included, I hope that the Minister will be able to reassure the House that there will be a proper discussion if the powers that she has retained are ever to be triggered. If so, we can accept the clause in the interests of speed, although my hon. Friend will make a shrewd, tactical judgment on how to progress it through Committee. I do not intend to serve alongside him, because he will do it so well without me.

In part III, I welcome the explicit restriction on key escrow, which is well put. It is hidden away in part III, but at least it is there and it is a key development. Natural concerns arise about whether the Alliance for Electronic Business scheme will be acceptable, but it is the only one being discussed. The more that the Minister can do to review her latest proposals and then give comfort, the better. Certainly, I know that industry is waiting for formal announcements in support.

The Minister should not ignore my intervention in her speech. I say that because I am not sure that she fully took the point. If the Government introduce their scheme with the private sector, whether business or consumers, as a key escrow system, it may become the de facto standard for others to follow. It is best to be sure that the Government understand what influence they would have on the shape of the market if it were to adopt the wrong approach.

The biggest criticism of the Bill is that it focuses on cryptography. The process of encryption is important, including signatures—I do not underestimate their importance in getting the process going—but there are many other confidence-building measures that can be taken. Some of those 60 points in the earlier report I mentioned should have been slotted in during the consultation period—perhaps when no one was watching—and there would then have been huge excitement when the Bill was introduced, because it would have seemed to encourage electronic business more generally.

If the Government can be consistent about electronic signatures, I hope that we will see dramatic, exciting progress. I am sure that my hon. Friend the Member for Rutland and Melton will criticise the lack of other legal changes. I mentioned the Inland Revenue and Customs and Excise, because I know that they are working on the issue—that is what worries me. I am interested in the basis on which those organisations are working, because I do not want the Minister to be thrilled to have got the Bill through only to find that the Treasury announces that her system is incompatible with its system. That would not be the first time that had happened.

No time scale is given for the co-ordination of technical solutions for some of the other Government changes. There is also a lack of visibility for Government changes. I hope that the Minister will talk to other Ministers in her Department about the impact of the Bill on international trade agreements, for example, and whether they will be brought on-line in conformity with the Bill.

We also need urgent guidance, although I am not qualified to make comments on it, on how the courts will interpret some of the provisions in the Bill. What will constitute an acceptable signature for the courts? That will have be tested, but the issues include whether a certificate or identity is binding, the reliability of signature processes and technology, and the intent or possession—instead of relying on technical solutions alone. Those are complex issues and I hope that the Minister will at some stage assure the House that she has a grip on them. When the electronic signatures come to be tested in the courts, we do not want to find that the Minister's work is undermined.

Confidence is not just about encryption, but it helps enormously with verification of the identity of the people with whom one is dealing. Encryption can enable transactions to take place on the net in circumstances in which people do not know each other's identity and need some reassurance and verification. Certificates will be increasingly issued to identify people, but confidence and security can be given in other ways. Firewalls have been the normal way to protect information, but secure networks will be the way forward. The Government need to consider other methods of reinforcement that they can use when dealing with the consumer—we used to call it Government direct, but I cannot remember what phrase this Government uses for it. Will the Government use smart cards? I warn the Minister, if she is as keen on smart cards as I was, she will have the same battles with the Home Office that I had. In my day, the Home Office seemed to think that smart cards are identity cards and a terrible threat to civil liberties, which is of course nonsense.

I welcome the Bill. It will provide a Government framework for a self-regulatory prospect, but I warn the Minister to be careful in building confidence. We should not rely on the back-up powers. The Bill will underpin the admissibility of electronic information and I hope that the Minister will clarify the commercial law in other areas across Government. I hope that she will also ensure that the Government adopt the Bill as soon as possible after it hits the statute book. In conjunction with my hon. Friend the Member for Rutland and Melton, I hope that it hits the statute book in fine form, without any of its frills, as soon as possible.

6.28 pm
Mr. Brian White (Milton Keynes, North-East)

I had intended to start my contribution with an attack on Tory Front Benchers but, before I do so, I wish to exempt the hon. Member for Esher and Walton (Mr. Taylor). I agreed almost entirely with his comments, most of which were sensible and constructive.

Dr. Ladyman

That is why he is not on the Tory Front Bench.

Mr. White

There may be one or two reasons for that. It is interesting to contrast the consultation on this Bill with the record of the previous Government, because one or two points stand out. I remember working in the IT industry when the previous Government did not have an IT strategy. Their approach was very laissez-faire. I welcome this Government's IT strategy, which will build on what small businesses and the IT industry are doing and are good at.

The issue of key escrow has already been raised, so I shall not go into it. The hon. Member for Rutland and Melton (Mr. Duncan) mentioned IT failures, but I suggest that he considers the record of the previous Government and their decisions. The civil service used to be one of the best training grounds in the country for programmers and analysts. The previous Government's decision to bring in outside contractors and sell off parts of the civil service caused a lot of people to leave. We lost a whole generation of analysts and programmers in the mid-1980s; they went abroad because of the detrimental actions of the then Government. The Conservative party would do well to remember that many of the people who went abroad helped with the development of the internet in silicon valley.

The previous Government also created local monopolies with cable companies, which are causing some of the infrastructure problems. British Telecom used to be the cable company in Milton Keynes, which is a growing new city. BT laid the cable into the new parts of the city, but would not touch the older areas. Many households did not get cable because they were in the poorer, older areas. Because of its local monopoly, BT had no competition. The creation of local monopolies goes completely against the ethos of competition.

When BT was privatised, the Tory emphasis on ownership, rather than liberalisation, of the market—which is still apparent in some of the comments of Conservative Members tonight—distorted the argument. It should be about how to create a marketplace and the conditions for competition, not about who owns a business. However, the Tories have adopted that approach time and again, and they are making the same mistake tonight with this Bill.

Mr. Allan

Does the hon. Gentleman think that it would be helpful, in creating a better marketplace, for there to be competition over the single piece of copper that still goes into most households, by splitting off the local loop? Does he see that as the best way of generating unmetered calls and all the packages that we want?

Mr. White

It is not the only way, but I would not object to it.

I find it distressing that e-commerce is referred to as something new, which suddenly appeared out of a vacuum, with no history. Electronic commerce is not just the internet. Britain leads the world in electronic data interchange. We were responsible for a range of electronic innovations that are used when people make credit or debit card transactions over the phone. We must remember that, and learn from it. I ask the Minister to consider how the credit card industry started, and the ways in which credit cards have come to dominate the market. Although the industry's speed of change over the past 20 or 30 years is different from that of the net, there are similarities in market regulation and the way in which electronic communication has facilitated the interaction between shopkeepers and banks. The two industries are not exactly the same, but there are a number of similarities to build on.

The hon. Member for Esher and Walton raised an important point. The internet is not one thing, nor will it become one thing—it will be a range of technologies, linked to the web. Intranets and secure market places, to which the hon. Gentleman referred, will become increasingly important. They have different regulatory requirements from consumers interacting with an open system. There are very important considerations when it comes to secondary legislation.

The growth of call centres raises a number of issues. The Competition Commission is carrying out an investigation into the ice cream industry. Walls Direct is in my constituency, and I shall not use this debate to argue the rights and wrongs of such an investigation, but it has a direct effect on how e-commerce can develop or be retarded. It is important that regulatory bodies such as the Office of Fair Trading and the Competition Commission—I am not including Oftel—recognise the impact that their decisions have on electronic commerce and on what we are doing in making Britain a leader in electronic commerce.

With electronic commerce, we are talking about a global economy, not simply about Britain and the European Union. Decisions made by regulatory bodies in France and other countries, particularly the United States, have an impact on us. It is critical that we get the international agreements right.

The Competition Commission needs to consider new entrants as well as existing players. One problem with electronic commerce is that many of the key players are new entrants to the market—they did not exist when consultation took place in March, and that illustrates the speed of change.

My local newspaper runs a forum on its web page, to which anyone can contribute on the subject of their choice. I go through it regularly to respond to constituents on local issues. Somebody contributed an e-mail item about a court case and a paedophile. The item was withdrawn from the forum because it was considered libellous. A newspaper could have gone to its solicitors and published the article or not, depending on the solicitor's advice, but, because the item was transmitted instantaneously, with some people seeing it and responding, there was an argument about the legal definitions of when an internet service provider can withdraw such items. That example, although not about commerce, illustrates the change that has occurred, in that electronic commerce is instantaneous, and there is not necessarily time to obtain the legal advice, as there would traditionally have been.

This is a useful Bill, and I welcome it. Unlike the hon. Member for Esher and Walton, I think that part I is important, for one simple reason. Although I hope that it is not used, and agree that it should not be, its inclusion gives the industry the impetus to create a voluntary system. The hon. Gentleman talked about the internet watch foundation—an excellent example of what should have happened and will, I am sure, happen. I hope that, when five years are up, the sunset clause will be implemented.

One of my concerns about part I, however, relates to fees, whether charged on a voluntary or statutory basis. We must learn from our experience with the Food Standards Agency fees. One standard fee leads to problems for small businesses, while a sliding scale leads to questions of fairness. Why should larger companies pay massive sums to subsidise smaller ones? I do not have an answer, but we must get the issue right.

It is important to have a problem-solving mechanism in the voluntary system, as it evolves, so that the Government and the industry can resolve any concerns. One of the worst things that the Government could say is, "We have a problem. That is the end of the scheme, and we will implement part I." The Government should include problem resolution in their dialogue with the industry, and I am sure that they will.

Part I will have an impact on other consumer legislation. We must ensure that that legislation outlined in "Modern markets: confident consumers"—the Government's consumer White Paper—is compatible with part I and does not unintentionally implement it through the back door ahead of time or undermine what we are trying to do in agreements with the industry. Part I will give the industry a spur towards achieving a voluntary system, and allow it to do so in a flexible manner. What is right now may not be right in three or five years. The scheme must be allowed to evolve to accommodate changing technology.

It was interesting to compare part II with the Irish and Canadian examples. I think that the Government have got it about right. About five years ago, I wanted to introduce a scheme to replace all the mortgage deeds held by the company for which I worked, as they took up miles of corridor space. However, the lawyers told me that that was impossible, as each deed had to be written on a piece of paper bearing a seal. It is of critical importance to recognise that the problem goes beyond electronic signatures and includes the sealing of deeds. We must ensure that the electronic equivalents of deeds and seals are included in the provisions. I am therefore especially pleased with part II.

However, the Bill will permit individual Government Departments to operate at different speeds. I am worried that not every Minister will share my hon. Friend's enthusiasm for the Bill, and that some—especially if, God forbid, we get another Conservative Government—may not want to adopt its provisions. Therefore, I urge my hon. Friend to set a timetable and to encourage other Ministers to adhere to it.

When they were set, I considered that the targets for attaining electronic government were right. However, although it has been argued that key escrow was a valid consideration in 1996, we have now moved beyond that point. The time has come to review those targets and to consider whether they are still appropriate, given the changes in technology since they were adopted.

I congratulate the Government on the inclusion in the latest ministerial handbook of every Minister's e-mail address. I am delighted at that, as I hate writing letters and e-mails are much easier.

I am pleased that the old part III has been removed, and I welcome clause 13, which is excellent. I was worried that it applied only to part I, but I was reassured on that point—and delighted as a result—by what my hon. Friend the Minister said earlier.

When I intervened on my hon. Friend the Minister, I mentioned Oftel. The old saying is that anyone not part of the solution is part of the problem, and I continue to regard Oftel as part of the problem. Oftel will investigate complaints about any telecommunications company, but the process could take two to four internet years—about six to 12 months. Even when a solution is reached, it will not necessarily be implemented. The process takes far too long.

Oftel is also guilty of considering only the current state of the competitive market. It does not take into account the future and what we are trying to achieve. Do Oftel's decisions encourage or discourage e-commerce? I believe that it has a duty to encourage it.

Oftel says that it does not need more powers to encourage e-commerce. I disagree: however, if it really does not need new powers, it should make more use of the ones that it already has.

I understand that France Telecom in Paris has introduced an asynchronous digital subscriber loop system for £25 a month. That system is available now. BT has suggested that its system, which will be available at some unspecified future date, will cost about £60 a month. I am worried that we are slipping behind in that respect. The magazine Communications Week International stated: At first sight, the UK will have the most expensive DSL system in the world. Last week's decision by BT gets one cheer from me. Oftel must take seriously the question of the local loop, and offer proposals. BT staff say that they are happy to accommodate Oftel's decisions and to deliver on them, but Oftel must take the lead and take a long-term view about where the competitive market is headed. There is a temptation for BT to decide to delay the introduction of ADSL because the lease line system is very profitable. I hope that the company does not give in to that temptation, and that it introduces ADSL as soon as possible.

The new part III requires a confident regulator with modern powers. Although the changes to part III are welcome and right, we need Oftel to go further.

The warning has been given before that e-commerce might create information haves and have-nots. Much talk has been devoted to ways in which that problem might be avoided or rectified, but the key lies in the interaction between Government and industry on the one hand, and voluntary groups and local communities—both geographical and in terms of shared interests—on the other.

Many information technology pilot schemes are under way around the country, and the one in Lewisham is the most famous example. However, they do not cover the whole country. One of the biggest challenges facing the Government is to translate successful pilot schemes into schemes that offer something to everyone.

Mr. Allan

Does the hon. Gentleman agree that it is critically important to get electronic banking right? Given that the world of e-commerce is based on credit and credit cards, many of the people about whom the hon. Gentleman is talking will be excluded.

Mr. White

The hon. Gentleman anticipates my next point. The growth of institutions such as E.Bank, First Bank, Egg and others is an important step forward, which I welcome. That development will transform the way in which the internet is used, just as direct marketing via telephone lines did three or four years ago. An important development is taking place, and the Government should facilitate investment in the new companies coming on line.

I mentioned the Competition Commission earlier, and a regulatory framework needs to be put in place for e-commerce. The financial markets and the Treasury must recognise that they need to facilitate e-commerce. The Bill is therefore extremely important, but it could fail if other bodies put obstacles in its way. The Government must have a joined-up approach. I welcome the fact that we have an e-Minister, and an e-envoy who knows his way around the civil service, but we must not allow the problems that I have outlined to take root. It is encouraging that the Government recognise the danger, but they must also deliver when it comes to avoiding it.

I am also made uneasy by the innovations that are taking place. We talk about electronic communications, but there is no guarantee that innovations will be confined to that field. For example, although I am not sure that the solid state transference systems already operating in laboratories are covered by the Bill, the Government need to be aware of the issues that such innovation raises.

If I can agree with the hon. Member for Rutland and Melton about anything, it is with his comments about language. I wholeheartedly endorse what he said about the need for our legislation to be written in plain and non-sexist language. This Bill is one of the better examples of the use of non-sexist language, but it still refers unnecessarily often to "him", "he", "it", and so on. Such references are not needed, and I plead with the parliamentary draftsmen to recognise that we are not living in the 18th century.

Mr. Baldry

Does the hon. Gentleman realise that, under the provisions of the Interpretation Act 1978, which date back almost 100 years, any Act of Parliament allows us to construes the word "she" whenever "he" is used? It is a totally neutral word.

Mr. White

I accept that there is such an Act, but not that that position is valid. If business, local authorities and most people outside can use non-sexist language as a norm, there is no reason why this place cannot.

I support this much-needed Bill. The changes that it makes will benefit this country, but other changes in respect of infrastructure and of obstacles in government and business must also be tackled.

I congratulate the Government on listening to industry. Industry said that it did not believe that the original provisions were right and asked for change. The Government listened and changed the Bill. That is a foundation for success.

I also congratulate the Government on securing a double whammy by helping British business while exposing the divisions among the Tories and their hatred of the European Union. One has only to mention Europe and they find a reason to vote against things. Opposing the Bill, as the Tories want us to tonight, would damage the United Kingdom's lead on e-commerce. I congratulate the Government on resisting that, and on the Bill.

6.51 pm
Mr. Brian Cotter (Weston-super-Mare)

Unfortunately, owing to a prior engagement, for which I could find no substitute, I shall have to leave before the end of the debate. I have notified Madam Speaker and the Minister.

I have a small business, although it is not particularly an electronic communication business. My interest is that, like many businesses, we hope increasingly to use such means.

I know that the Government attach particular importance to the Bill because Her Majesty has announced it twice. I congratulate the Department of Trade and Industry to the extent that, over time, it listened to very real criticisms. The Bill has shrunk and shrunk, for which many of us are grateful. We are particularly glad that the Department has excised part III of the draft Bill, which had no place in trade and industry legislation. It would have been better suited to the Home Office.

The final Bill is slim, but I regret that I must still question the relevance of some of its remaining limbs. Its ultimate aim is to facilitate the growth of e-commerce. The DTI's press release states that the Bill is designed to develop the UK as the best environment world-wide in which to trade electronically. Liberal Democrats support that because electronic efficiency will increase overall wealth by raising economic efficiency.

I am sure that the Minister agrees that it is important that traders recognise that the internet offers a new system of trading. Conventional trading techniques cannot simply be translated into cyberspace. I said that I have my own business. Many colleagues would expect me to say that I have an established web presence and that everything is up and running, but that is not the case. Instead, having, I hope, amended our computer systems to ensure that they will not be hit by the millennium bug, we are carefully re-examining our sales strategy and products in conjunction with a marketing company. We will soon be looking to market our products through e-commerce. It is important that business does not think that e-commerce is the answer, that one can simply slap something on a page and that is the end of it. The matter must be considered. I hope that the forthcoming Small Business Service will help to facilitate matters, especially for the small business community.

I well remember that when I was first elected to the House I was one of those who spoke about the millennium bug. I will not embarrass anyone, but a question on the subject was referred to the Minister responsible for the millennium dome. While there may be problems with the dome, that was not the force of the question. I take my hat off to the many hon. Members who know a lot about the subject, but many colleagues clearly knew nothing about it two and a half years ago. That extended to Ministers. It is important to educate people about electronic commerce.

The hon. Member for Esher and Walton (Mr. Taylor) is leaving. He rightly expressed concern about the cost of transmission. The Minister referred to the number of different options with, for example, mobile phones and suggested that that could be a way forward. I accept that, but the choice of systems is wide and it is not always easy to choose the most relevant, cheap and applicable one.

This morning I visited Meadvale primary school in my constituency, where I learned something that is relevant to the debate. I saw for the first time a system whereby the lesson—in this case a geography lesson—was projected straight from a computer on to the wall. The system is quite expensive, but the school was able to employ it through special funding. Children could see the whole globe on the screen. It could be adjusted to show the country concerned. My point is that this is another means by which we should be able to communicate sales or other messages within companies or to other companies.

I will concentrate on the Bill's two substantive sections: the setting up of the approved cryptography provider register and the legal status of electronic signatures. I am not sure that the section on approved cryptography providers could not have been dropped altogether. That is the opinion of the Law Society. The case for such a register has not been convincingly made. The market is developing fast. Lack of confidence in cryptographic efficiency is not a significant barrier to trade.

Mr. Allan

Does my hon. Friend share my experience of common information technology standards? Their great joy is that there are so many from which to choose. Is he worried that the cryptography service may fall into the same trap as other Government-promoted standards such as those for networks, whereby the Government produce a scheme that industry rejects because it has moved on years by the time that it is implemented?

Mr. Cotter

Exactly. I hope that the Minister understands that point of concern and will address it.

I welcome the clause that explicitly forbids the introduction of requirements for key escrow. I shall not say much about that because many hon. Members have covered it. The fact that the Government feel obliged to put a curb on their secondary powers is of concern.

Mr. Duncan

I am most encouraged by the fact that the hon. Gentleman agrees with so much of what I said. Do Liberal Democrats intend to vote with the Opposition on our reasoned amendment?

Mr. Cotter

We are concerned about many points, and we shall listen closely to the Minister's response. Although the Bill has some faults, we shall be able to discuss it in Committee. As the hon. Member for Esher and Walton pointed out, the Bill has its faults, but it also has some merit. We shall consider carefully what the Government say. The welter of reserve powers is of great concern, and occurs increasingly in Bills introduced by the Labour Government.

Another problem relates to a basic concept of the legal process. At present, a signature is valid only if one intends to make it so. In any dispute, the burden of proof is on the person who intends to rely on the signature, not on the person who is alleged to have made it. I am concerned that that distinction is in danger of being overturned by the measure. The evidential weight of a signature certified by an approved provider will be in favour of its recipient.

If consumers receive goods or services that they claim not to have ordered, a supplier may be able to hold them liable simply on the grounds of receipt of their electronic signature, and the burden of proof will be on consumers to prove that they did not make it.

Mr. Allan

Is my hon. Friend aware of the phenomenon of "granny chose a weak password and lost her house"? It applies where a grandson uses a computer to send something with a signature that was apparently valid, and—exactly for the reasons to which my hon. Friend referred—the consumer is held liable. If people cannot have confidence in their passwords, and the security of their home tenure, it will undermine the whole of e-commerce.

Mr. Cotter

I thank my hon. Friend for that intervention. In the light of earlier comments about including both genders, it would cover not only grannies but grandfathers. The Bill needs some tightening in respect of signatures.

Problems arise in relation to secondary powers and provisions that confer legislative powers on other Departments. The Minister for Small Business and E-Commerce referred to sunset regulation. She also answered a question about whether the Home Office would be able to overrule the Bill, and made several other points. I look forward to hearing those points strengthened later in the debate.

My hon. Friend the Member for Somerton and Frome (Mr. Heath) referred to the fact that the Lord Chancellor's Department had stopped the transmission of an e-mail, and asked the Minister for an explanation. I understand that it contained a somewhat rude reference to a judge. I am not sure whether that was grounds for not permitting the transmission.

The Government's aims are admirable, and we welcome the slimmed-down Bill. It is important that we should have a Bill, but we urge the Government to consider the concerns expressed by Liberal Democrats and others, so that we can produce a Bill that we can all support.

7.4 pm

Barbara Follett (Stevenage)

I welcome the opportunity to speak in this important and timely debate, because, in the last few days of the second millennium, it is fitting that we should prepare for the demands of the third. Those demands are already with us. It is not only the century and the millennium that are coming to an end; as we speak, our old ways of communicating, trading and gathering information are on the way out. We are in the middle of a change so swift and so silent that many of us are scarcely aware of it. None the less it is there, and it is profound.

During our debate, people throughout Britain have been buying clothes in America, books in London, shares in Australia, gifts in Scotland, cars in Bristol and groceries down the road—all without leaving their homes. Sitting at screens in their bedrooms and living rooms, people are looking for jobs, debiting and crediting their bank accounts, downloading information and entertainment and chatting with friends on the other side of the world. If they want, they can go on all night or all weekend, or throughout all public holidays. That is a radical change in our use of time. It is a 24-hour world, with 24-hour trading, communication and information available, globally, at the click of a mouse.

I welcome that. As a mother with children scattered all over the world, whose working hours are unsociable, to say the least, that change is a real boon—especially at this time of year, when, with alarming regularity, I remember that there are only 25 shopping days until Christmas, that I have bought only two presents and that I do not know to whom to give them. Christmas is hard on the feet and on the wallet; on-line shopping does nothing for the second, but does wonders for the first.

It is estimated that the British people—including my hon. Friend the Minister for Competitiveness—will spend £14.2 billion on Christmas this year. As 13 million of us now have access to the internet, it is fair to assume that a sizeable amount of that money will be spent on-line. With 10,900 users coming on-line every day in Britain, that amount can only rise. In a year, the 179 million people who use the internet worldwide will rise to 250 million. Much of that growth will be in Europe, where it is predicted that one in three households will be on-line by 2004. Let us hope that much of that growth will take place in Britain. At present, we are second to Germany in the league table. By 2003, I want Britain to have the largest number of internet users in Europe.

Predictions for the growth of internet usage suggest slow but steady growth. Predictions for the growth of e-commerce suggest a sudden dramatic rise. In February this year, the market for e-commerce was estimated to be worth £12 billion; by 2004, it is predicted that it will reach £1 trillion. With figures like those, British businesses have no alternative but to go on-line. Many of them are on-line—especially retailers. That move may revive the fortunes of our high streets, where the reduction in the pressure for space resulting from the bigger supermarkets moving out may allow smaller niche stores to take advantage of the trend towards leisure shopping for unusual, individual items. I welcome that.

Most of the supermarkets are already on-line. Even the venerable Marks and Spencer went on-line at the weekend, although, admittedly, only to 1,000 select customers in Beaconsfield. I am not sure why Beaconsfield was chosen for the pilot scheme. Perhaps it has something to do with the hon. Member for Beaconsfield (Mr. Grieve), or perhaps it has something to do with the fact that my right hon. Friend the Prime Minister piloted his political career in that constituency, so perhaps it is a good area for pilots.

Banking on-line is well under way. Young people, in particular, prefer on-line accounts. As someone who, 30 years ago, worked in the hallowed marble halls of banks, I know how intimidating they are. On-line accounts are much more accessible, flexible and user-friendly; they are also far cheaper. However, the culture of call centres obviously needs a shake-up.

On-line share dealing is relatively new, but it is already enormously popular and it helps small investors to take on the mammoth firms. The launch of cut-price brokers has slashed the cost of buying and selling shares. Not surprisingly, the number of web-based share deals has more than tripled during the past few months. Small investors are making about 50,000 internet share deals a month, compared with fewer than 10,000 in January 1999. In the United States, where web-based share dealing began as recently as two years ago, a quarter of all trading is now done on-line, and 5 million people buy and sell electronically every day. Thanks to on-line information, small investors are coming into their own.

One of the newest developments on-line is the giving of donations, especially to the third world. I welcome the part that the Grameen bank—one of the leading groups in micro-financing in the third world—has played in bringing the internet to places such as India and Bangladesh. A subsidiary of the Grameen bank is now the largest internet provider in Bangladesh.

There is also much talk of third-world countries using the internet to make direct contact with firms in the first and second worlds, to deal directly with them, cut out the middle people and get a fair deal for their goods. That, like the other lightning-quick changes associated with the internet, poses problems for individuals, trading blocs and, in particular, Governments—problems that require careful and considered responses if they are not to kill the very thing that they are trying to foster.

Therefore, I am glad that the Bill, although a long time in coming, has been out to consultation twice before coming to the House. I am also glad that the Government took seriously the comments of those consulted, and amended the Bill in parts. We should be proud of the result. It addresses the concerns of consumers and producers alike, without overburdening them with regulation—a difficult balance to achieve—and despite the language, on which I am in complete agreement with the hon. Member for Rutland and Melton (Mr. Duncan), I thank those who drafted it.

On-line shoppers, bankers and share dealers throughout the world want security and confidentiality in their dealings on the net. Without that, we shall not get the trust necessary to develop the potential of the new technology. That is illustrated by a headline in this weekend's edition of the Sunday ExpressWe're afraid the 'E' stands for easily cheated says Simon Hinde, commenting on the software malfunction that caused a security breach in a major bank last week and allowed people to view other people's shares, causing a great deal of anxiety.

The Bill addresses some of that anxiety, especially with the introduction of electronic signatures, which are vital for the building of that trust. Part I, which provides for a list of the providers of electronic signatures, is also vital. We need the information, we need to know who the best providers are and we need the voluntary kitemark to which providers are being asked to subscribe.

I welcome all the provisions of the Bill, and I especially welcome the help that it will give my region. The eastern region, although one of the most developed areas, still lags behind London in its use of e-mail. Eighty-one per cent. of firms in London use e-mail, as opposed to 57 per cent. in the eastern region. That shows that we have a problem with take-up, because in the eastern region we have as many computers with modems as people have in London, but there is 23 per cent. under-usage of those PCs.

Mr. Cotter

Would the hon. Lady elaborate? Does she feel that that under-usage results from the fact that people are not well enough informed or from the costs of transmission?

Barbara Follett

I have spoken to businesses in my area about that. It is partly to do with the costs—although those businesses have invested in PCs—and partly to do with lack of training, but mainly to do with lack of confidence. People believe that if they put out on the net their signature, or something confidential, it can be read. In some cases, that fear is still well founded. People cannot be sure that their e-mails will be confidential.

The Bill goes a long way to restore that trust and confidence, so I welcome it. I know that, when it becomes law, people in the eastern region will feel better about giving credit card details. Worldwide transactions on the net are most often aborted when people are asked to key in their credit card number. Therefore, the net is being used much more as a marketing tool than as a purchasing tool. If we want to gain the maximum benefit from it, we must ensure that it is also used for buying and selling goods. That is such a challenge in the east of England that the development agency considers that its main task in the next few years is to encourage the spread of e-commerce.

As the Government will be doing 90 per cent. of their routine procurement on-line by 2000, businesses must take up the net. They must meet the challenge of that new technology. Furthermore, if we are going to face the future—the future in which we have set-top boxes and can access the net in ways other than by using PCs—we must ensure that people have confidence in that technology.

I look forward to the day when I can access NHS Direct as NHS on-line, interactively with my television or my PC, but I know that I shall want that information to be confidential. Who wants to share their bunions with the rest of the world, still less with the rest of the press? However, if I can be certain that my personal information will remain confidential, such access will be a marvellous tool. The Bill goes a long way to ensure that we meet, and are prepared for, the future.

7.17 pm
Mr. Tony Baldry (Banbury)

I start with two declarations of interest and two apologies. My first declaration of interest is the one in the Register of Members' Interests. I am chairman of a United Kingdom subsidiary of a Saudi Arabian company which owns one of the seven internet licences in Saudi Arabia. Other companies with which I am involved also have internet interests.

My second declaration is that I shall speak on behalf of the Select Committee on Trade and Industry. The Committee has 11 members, 10 of whom are in Sweden at present. I am sure that they are doing very valuable parliamentary business there. I am the only member who appears not to be in Sweden, so it has fallen to me to speak in the debate on behalf of the Committee. For reasons that I shall explain, the Committee has done a fair amount of work on the Bill. I hope to share some of our—unanimous—thoughts with the House; during this Parliament, all our reports have been unanimous.

My first apology is that, in the Bill and the debate, there are many words that one just has to assume that everyone understands. Perhaps Hansard should include a glossary of terms such as escrow, encryption and T schemes. One must assume that everyone who takes part in the debate understands those terms, because it would otherwise be difficult to communicate.

My second apology is as follows. I discovered a little while ago, when things such as A to Zs and telephone directories became a blur, that I needed glasses. I have not yet cracked how to read and look at the Chamber simultaneously, and I have a choice: either hon. Members will be a blur or what I want to read will be a blur. I hope that hon. Members will not mind if I decide that it is preferable that they should be a blur and that I can read what I want to say.

The Select Committee has been considering e-commerce for more than a year. As I believe that we have all heard, proposals for the Bill have now been in two Queen's speeches. So for the first few months of 1999, the Select Committee was in a curious position: we began to take oral and written evidence, but the Government were unable or unwilling to produce a Green Paper or a White Paper, let alone a Bill. We had to respond to proposals of uncertain weight.

In March, a consultation document proposed, among other things, a statutory voluntary licensing scheme for cryptography service providers, a legal regime for electronic signatures centred on the introduction of a rebuttable presumption, the promotion of key escrow and key recovery technologies without making key escrow a criterion for licensing, and power for the law enforcement authorities to require keys or decoded texts under the equivalent of a warrant. The Select Committee on Trade and Industry considered the consultation document's proposals swiftly and reported in May. We recommended that there was a need to justify the rebuttable presumption regime, that powers to introduce a statutory scheme should come about only if a self-regulatory scheme was seen to fail, and that key escrow should be dropped altogether in favour of the proposed new power.

In June, the Select Committee reported on a range of e-commerce issues not in the legislative programme. In July, the Cabinet Office performance and innovation unit reported on a similar range of topics and, at the end of July, the Government published a Command Paper containing the reply to our report and the draft Bill. I am glad to say that the draft Bill adopted the Committee's recommendation that a statutory scheme should be introduced only when a voluntary scheme was seen to have failed, followed the Committee's lead and abandoned rebuttable presumption in favour of prevailing legal doctrines, and dropped key escrow promotion.

Earlier, it was said that the Government had listened to industry and business. I hope that, in taking evidence, the Select Committee also provided a way by which those concerned could make their views known to the House. By producing a report, I hope that we were able to consolidate and harmonise those views. It is to the Government's credit that they took on board the unanimous report of the Select Committee.

The Select Committee does not hang about—indeed, we worked over the summer and produced a report based on the previous evidence. The Minister was once a member of the Committee, but he found the pace so fast that he asked the Whips whether he could be transferred to a job in government; he found it too difficult to keep up with us. The Committee considered the Department of Trade and Industry's response to written questions and the responses received by the Department about the draft Bill. It agreed a report on this draft Bill in late October. The report was published on 3 November and made several detailed recommendations.

It would be fair to say that the Select Committee welcomed the Bill. We welcome clause 13, which is in part III. It is a crucial new provision that responds to the Select Committee's recommendation that the Bill should explicitly exclude the use of key escrow as a criterion for accreditation under a statutory regime. Of course, more information is required on some subjects. In particular, information is required on the timetable for the commencement of parts I and II, on a draft of the T scheme and on its start date, which will be independent of the Act, and on the level of fees. Doubtless, such issues will be dealt with in Committee.

Some measures have been added to the draft Bill that require explicit justification. They include the clause 8(3) change to relax the criteria for record keeping of electronic storage or communication, and the clause 9(6) rider, which expands the scope of orders made under clause 8. Part III, which was formerly part IV, on telecommunications licence modifications, is not only an ever more evident add-on, but raises fresh unease because it will give added powers to the director to decide what constitutes a significant minority for objections. There has been no sign of movement on the process for changes deemed regulatory, but it is balanced by an attempt to clarify grounds for appeal.

I suspect that the members of the Select Committee and of the Standing Committee will want to ask specific questions. It would unfair to detain the House on those points now, because they are matters for Committee. However, it will be good if the Government can keep the House and industry abreast of the implementation dates for various provisions in the Bill. They are not always self-evident from the Bill and people will want to know when the different provisions will apply.

Although it is a narrow Bill, its provisions are clearly worth implementing. I hope that the kitemark of approval and the Bill itself will start to encourage consumer confidence. The hon. Member for Stevenage (Barbara Follett) made a sensible and proportionate contribution and she made it clear—I think that everyone would agree with this—that although the internet and e-commerce are expanding exponentially, huge numbers of people are wary of using the internet simply because they are worried about fraud. If the Bill can help reassure consumers that such fraud will not take place, it will promote consumer confidence and e-commerce in this country.

Whatever we do in legislation, concerns will remain with which legislation simply cannot deal. In an earlier report, the Select Committee expressed concern about what is known in shorthand as the "digital divide", through which the poor and the elderly feel excluded from the internet. It is not easy to legislate for that problem, but public policy should be concerned about it. As public policy makes provision for services, such as NHS services, to become more readily and more easily available on the internet, we must recognise that, for all sort of reasons, some people will for a long time find the internet difficult to use.

Mr. White

Does the hon. Gentleman accept that voluntary groups have a key role to play in ensuring that access to the internet and similar facilities is available to all? I commend the example of Sweden and Finland, which have gone down that route. Does he think that such an approach is useful?

Mr. Baldry

When my colleagues return from Sweden, I am sure that they will bring with them good news about that. I visited a college of further education in Banbury the other day and saw signs for a course entitled, "Computing for the terrified". I have enlisted for the next course that the college runs.

On Europe, it is important that we recognise the value of the European Union's internal market as our marketplace. In so far as the Bill sets a precedent for the rest of the European Community, it will be good news. However, the Standing Committee considering the Bill must recognise that the European single market is our domestic market and that we must consider liabilities and consumer rights in the internal market. I accept, however, that that will involve complex issues, such as when contracts are signed.

Will the Minister say a little more about the e-envoy or e-tsar? Everyone now seems to be a tsar, and I am looking forward to being appointed one. Some of us are not allowed to sit on the Opposition Front Bench, so perhaps a few more "tsarships" could be given out. It strikes me that one of the great virtues of the Russian royal family was that everyone seemed to be related to one other and everyone had a title.

The story of the e-envoy is not a happy one because that seems to be a virtual appointment, and he or she has a role to demonstrate that e-commerce is not all pornography, gambling and electronic boot sales. I suspect, however, that the e-envoy has a very important role, but I am not sure that it has been fully or sufficiently promulgated to the House, to industry or more widely.

If or when the Bill obtains its Second Reading, the Minister and the Department might consider using the vast army of Government information officers to ensure that more work is done in the business pages and in the media generally to explain the Bill, not to those who are already knowledgeable about it, but to the broad sweep of people in business or commerce. They will want more clearly to understand the Government's proposals and what exactly people such as the e-envoy will do.

I have seen the reasoned amendment in the name of my right hon. and hon. Friends, and the Opposition have decided collectively that they must vote against the Bill. As I believe in collective government and therefore in collective opposition, I shall join my colleagues in the Lobby. Suffice it to say that the Select Committee's recommendations were unanimous and, on behalf of the Select Committee, I thank the Government in so far as they have listened to those recommendations.

7.31 pm
Mr. Derek Wyatt (Sittingbourne and Sheppey)

Thirty years ago last month, the internet was born. It connected nuclear scientists in a restricted number of universities across America, courtesy of the Pentagon. I suppose that today we would call that an intranet. A second system was then devised that linked all academia in America. That was our first e-mail system, and it is called the internet.

Eight years ago, however, a Brit, Tim Berners-Lee, working at the CERN laboratories in Switzerland, gave us a brand new language—www, or the worldwide web— and the modern graphical internet arrived to change our lives. Tim, who is not yet Sir Tim or even Lord Web, ought to be a vice-chancellor or a professor of computation in the United Kingdom, but alas he works at the media laboratory at Harvard. Although we have just announced a link between the Massachusetts Institute of Technology and Cambridge, it is a pity that we have not properly enabled Imperial college, which is easily the best science and technology centre of excellence in the United Kingdom. Imperial already outstrips Oxford, and ought to be given university status of its own and the chance to become our own Stanford university. However, I digress.

Before discussing the Bill, I should put on record that I am the—alas unremunerated—non-executive chairman of the council of Clicksure, which has offices in Oxford and Washington DC. Clicksure is an ethical—I must be careful about the use of that word—standards association on the internet which analyses websites.

Last week, on the BBC show "Watchdog", Anne Robinson took great pleasure in upsetting a website called "lastminute.com", which is a brilliant site run by a brilliant UK company. Somehow the "Watchdog" team managed to book two tickets from its site with a dodgy credit card. Had "lastminute.com" been clicksured, that could not have happened. Clicksure evaluates a website to check that it is safe, so that consumers can trust it. That has some relevance to today's discussions of the Bill.

I am also the founder of the World Internet Forum. This morning, we addressed more than 60 ambassadors and their staff on the subject of the forum, which will take place in Oxford next September. The World Internet Forum aims to become a portal for public services in the world.

E-commerce can have the most stimulating effect on a company's bottom line. Let us consider Cisco, the US Nasdaq-listed router company, which worked out that the cost of a conventional invoice was just over $100. When it switched to electronic invoicing, it saved a cool $600 million in the first year because the average cost of the same invoice was just under 50 cents. I wonder where the innovation in this country is when a company such as Cisco can show us the way.

The Bill has been a long time in gestation, but it is all the better for it. It is in three parts, and I shall discuss each one, in reverse order. The last part, which deals with telecommunications issues, is a bolt-on and clears up issues dating back to 1984. I shall not detain the House further on that because I have noted that the Minister has already agreed to go out to wider consultation on that; and it needs wider consultation.

The middle part, entitled "Facilitation of electronic commerce, data storage, etc.", deals only with electronic signatures, and I want to address the problem of voice signatures. I shall try to explain the new technology that is already on the market, which inverts the www language, and is currently called "mmm". Mmm is part of the WAP—the wireless application protocol. I shall try to explain how it works.

I have said before that the House is not kitted out for the 21st century, but I have here a tri-band mobile phone which is currently on sale in the United Kingdom. It is voice-activated, as most phones are, but in this case I mean that I can gain internet access by talking to it. I can phone a number and by talking via the website on the phone I can ask for the train times from Sittingbourne to Victoria. That information will be voice-activated and sent back to me.

Hon. Members may ask what that has to do with signatures, but what if I were phoning my bank? There would have to be a voice signature for the new technology as well as an electronic signature. I want better to understand whether the electronic signature arrangement adequately covers the voice wireless application protocol. I can see civil servants nodding and I will be reassured if that is the case.

Mr. Duncan

Is not voice recognition a form of unique encryption which is delivered electronically? I therefore guess, and hope, that it is included in the Bill.

Mr. Wyatt

I am getting reassurance from the civil servants who drafted the Bill. Let us wait and see whether that is the case.

I am not quite sure which Department would be responsible for the second part of the technology that I shall describe, but I shall try to explain it clearly. I have here a mobile phone and a credit card. I am sure that hon. Members understand what those things are, but from next year, credit cards will change and will contain a chip. That can be inserted in the phone, and, using the voice mode, I can phone and order money to be downloaded on to the card, or I can tell the card to purchase jeans or anything else that I want to buy.

For that technology to be effective, a third party must hold my details, such as the interests that I subscribe to, which include Charlton Athletic and English rugby. I would therefore have to trust the details of the card to a third-party holder. That is not provided for in data protection legislation. That technology is already available in trials, and 1,000 such phones are on trial in Leeds this week. They are also on trial in Finland and America.

Changes are occurring in the way in which the internet is accessed and credit cards are used. If one says, as the Opposition do, "Let us not have regulation," I reply that we have to be careful not only to explain what is happening to the UK population but to make sure that we have a proper safety environment. That is why I think that you are wrong, if you do not mind my saying so, about your opposition to that part of the Bill—

Mr. Deputy Speaker (Mr. Michael J. Martin)

Order. The Chair is never wrong.

Mr. Wyatt

I wish that I could get away with saying that, Mr. Deputy Speaker.

I want to know, as the technology is currently available, whether there will be an opportunity to include it in the Bill, so that the Bill is the best that we can provide.

That brings me back to the light-touch framework that we have agreed on. The basic issues of the internet are ones of trust. We have to make sure that when we order goods, we receive what we ordered. It is very easy to trust amazon.com.uk. Why? All the credit card companies came together and guaranteed purchases from amazon.com.uk. Unfortunately, not every credit card company will give its guarantee that every one of the 10 million websites can be trusted. We need to develop a common trust—a way of branding a website front page, so that when people see the brand, such as the Clicksure, Consumers Association or "Which?" brands, they will know that the site is safe and secure. The more the Government can do in that respect, the better, and that is what is laid out in the Bill.

Dr. Palmer

As I am sure my hon. Friend is aware, efforts in the United States to develop some sort of kitemark have run into difficulty, because a great many websites display some form of kitemark, but do not fulfil the functions envisaged for it. Does he have views on how we should tackle that problem, so as to prevent our kitemark from being discredited?

Mr. Wyatt

That is a tough problem, and I do not think that there is a technical solution to it.

The first part of the Bill, entitled "Cryptography service providers", is the most interesting. However, I have a problem, and I hope that the Minister will be able to ease my concerns. The internet is global, but in the Bill, we are agreeing a UK signature scheme inside a European framework. Fifty-eight per cent. of our business is in Europe and 12 per cent. in America. What is the validity of a UK signature on the one hand, and an American signature on the other, on an electronic document?

In addition, we have to take into account enlargement of the EU, which currently encompasses 15 countries, but which might include as many as 28 in future. Not all those countries are internet friendly or internet savvy, so what will be the legal position in respect of the directive in countries other than the current 15?

I struggle with the question of where in the world we are to draw up a global standard. I am not sure it will be the United Nations and I doubt it will be UNESCO; it might be the G8, but that might not be fair; I hope it will be the World Internet Forum, but I might be prejudiced. We have to consider the issue, because signatures must be uniform; otherwise, America will determine the rules by default, based on the fact that 90 per cent. of all servers are American and 92 per cent. of all traffic is either American or goes to America. We do not want America to take all the trade, and thus all the tax.

I know that OECD committees are struggling with that issue and with ways in which to account for VAT and corporation tax. My hon. Friend the Minister for Small Business and E-Commerce referred my attention to a commendable Customs and Excise paper that she received on Friday. I hope that it is more reassuring than the telephone conversations I have had with representatives of Customs and Excise.

Let me explain the problem. When ordering CD-ROMs from Amazon.com, one is allowed to order only £18 pounds' worth before becoming liable for purchase tax or VAT. However, the orders go through at such an alarming rate that Customs and Excise would have to treble or quadruple its staff to measure how much VAT was leviable. Hundreds of pounds worth of goods can be delivered to one's home, but one will not be asked to pay any VAT. Where is tax to be paid? How is it to be collected?

Mr. Gibb

When goods are ordered from abroad by phone or by post, if they come in a parcel—as physical goods—Federal Express or whoever delivers the parcel independently and charges the buyer VAT and duty on the goods. There is no difference if the goods are ordered via new technology.

Mr. Wyatt

That is not the case—I have talked the issue through with Customs and Excise. It ought to be so, but it is not.

The other EU-related problem arises from its attempt to base its regulations on country of origin. How big a police force would the EU need to police the net when trillions of deals are done on it every day?

I support the unmetered calls brigade. I know that my hon. Friend the Minister for Small Business and E-Commerce also favours such a move, and I wonder whether she can give us a clue as to how it can gradually be introduced, initially to socially excluded people. A gradual approach, extending over the next two years, should be taken to the introduction of unmetered calls, so that poorer families receive the benefit first.

I have led the campaign in the House to end BT's local loop monopoly. It should be broken up sooner than Oftel recommended. Mention has been made of the Oftel culture, an example of which is that Oftel agreed that the local loop should be broken up, but gave BT 18 months to gets its opposition in first. However, there is no logical reason why the local loop cannot be broken up tomorrow.

I hope I can persuade Ministers to consider how we can become a smarter nation, even though the matter is not covered by the Bill. In 1951, we gave a tonic to the nation, and I hope that in 2001 we can give a present to the nation. The Millennium Commission ceases on 31 December 2000, giving us an opportunity to reallocate the lottery money. I am making a pitch for infrastructure to become something on which lottery money can be spent. It would be wonderful if, on 1 January 2001, we could give every home an internet machine, thus becoming the smartest community in the world. We can afford it, the lottery money is there, and it would be a fantastic gesture.

The explanatory notes to the Bill state that the Government has set itself targets for making Government services available electronically: 25 per cent. by 2002, 50 per cent. by 2005 and 100 per cent. by 2008. The Government has also set a target for 90 per cent. of its routine procurement of goods to be done electronically by 2001. Over the past two years, my right hon. Friend the Leader of the House, who has ultimate responsibility for dealing with the millennium bug, and I have engaged in friendly debate. I asked her to produce a league table of Departments to enable us to assess risks from the bug Department by Department. Eventually, a sort of league table was agreed.

In the same spirit, I ask my hon. Friend the Minister for Small Business and E-Commerce to designate a single Minister to be responsible for procurement delivery systems—it would be helpful if it were she. May we also be told the name of the Minister in each Department who is responsible for procurement? As was done in respect of the millennium bug, would a quarterly report to the House be possible, to enable the House to know how each Department was implementing the electronic delivery system?

Mr. St. Aubyn

I was interested to read the hon. Gentleman's comments, published on the BBC news website. He said: The trouble is that many traditional Labour people come from the public sector and they are the last people to understand where we are on this. Will he confirm that those were his comments? Does he think that the necessary talent to fulfil such a role is available on the Labour Back Benches? Did he not also say that the Government's approach—to establish an e-tsar and a Minister in the Department of Trade and Industry—was mad?

Mr. Bob Russell (Colchester)

Deny it.

Mr. Wyatt

I should never deny that—it was on the web. It is a serious point that many Labour Members of Parliament have come from the public service sector, and many of those who were elected in 1983, 1987 or 1992 missed the introduction of the internet in their place of business or their public service office. As for the e-tsar and the e-commerce Minister, I have been on record since October 1997 as saying that they should form part of the Cabinet Office.

During our first debate on the internet, in March 1998, I stated my belief that we needed a new Government department of communications; I still believe that. The hon. Member for Esher and Walton (Mr. Taylor) referred to this matter in his speech, but did not seem to know where to take it. The internet would enable services to be delivered better, quicker and cheaper, but it also challenges us with a fundamental question: what is the future of government? As a culture, we have not yet addressed the question of what the internet will do to us, to government and to Whitehall. Massive Departments are not needed if the medium of the internet is understood and utilised to its fullest potential.

I welcome the Bill. It is drafted in the right spirit and is exactly what we need. I congratulate the Government.

7.50 pm
Mr. David Ruffley (Bury St. Edmunds)

The Bill addresses a subject of monumental national economic self-interest. The significance of e-commerce is difficult to overestimate. The statistics supporting that proposition are certainly worth repetition. It is estimated that in 1998 business-to-business e-commerce amounted to about $43 billion worldwide. That is predicted to rise to about $300 billion by 2002. The value of e-commerce between businesses and consumers is at a lower figure. It was about $7 billion worldwide in 1998 but it is expected to rise to about $80 billion in 2002. Citizen-to-Government e-commerce is the subject of some not very ambitious Government targets, as my hon. Friend the Member for Esher and Walton (Mr. Taylor) observed. To have 25 per cent. of Government services available on-line by 2001 does not seem especially ambitious, and it does not appear that the Government are leading the way as they should.

It is clearly the Government's duty to ensure that UK plc is in pole position on the information superhighway rather than having to pull over into the information superlayby. Having read the Bill and having listened to my hon. Friend the Member for Rutland and Melton (Mr. Duncan), I am not convinced that the Bill will do much to put us in the first category rather than in the second.

It is a truism that e-commerce is developing so rapidly that legislators throughout the world are finding it difficult to keep up with the pace of change. It is said by some commentators that in a perfect world it would be best for companies if every country had the same law regulating e-commerce transactions. We know that in the real world that would take years to negotiate, if that ever proved possible. We know also that ratification on an international treaty level would be very much a pipe dream. The Opposition have faith in the market and we have faith also in light and effective legislation, as my hon. Friend the Member for Rutland and Melton observed, only where legislation is absolutely necessary.

The Minister for Small Business and E-Commerce said that the industry had welcomed much of the Bill, and followed that up with some selective quotation. She should not get carried away. We have only to read what the Select Committee on Trade and Industry stated in its report, which was published at the time of the draft Bill in the summer. It made many criticisms of the Government but the one that caught my eye was in paragraph 34, which referred to inadequate political control being exercised over the development and determination of cryptography policy. The policy … has been allowed to drift for too long. It is imperative that Ministers take a firm grip of the issues from now on. In her opening speech and in her press notice launching the Bill, the Minister was voluble in her near-breathless enthusiasm and excitement about Britain leading the world in the first industrial revolution. She was keen for us to be leading the new revolution. She talked about how important it was to modernise—a key new Labour word— so that we could lead the world again. She said that she was determined "to get e-commerce law right and get it in fast." She also spoke approvingly of how the Bill would become one of the UK's first 21st century Acts.

It has taken the Government two-and-a-half years to get the Bill into the Chamber. We had a draft Bill in the summer which was manifestly a false start. We now have a deeply flawed Bill which has not been completely cleaned up following the draft Bill. I wish briefly to speak about the Bill's defects.

In part I, the Government propose a kitemarked self-regulated approval scheme covering all companies offering cryptographic services. That replaces the original proposal to require all such providers to have a licence, a condition of which was that cryptography providers would have to hold copies of customers' private encryption keys and provide law enforcement agencies with access to such keys in certain circumstances. That so-called key escrow proposal has been dropped, and I think sensibly. We have heard comments from hon. Members on both sides of the House to that effect. Instead, we now have a self-regulatory scheme which purports to ensure minimum standards of quality and service. A register of approved providers of cryptography support services will be established.

I agree with the Law Society and with my hon. Friends—even the Liberal Democrats chipped in with support on this point—when they say that part I could properly have been dispensed with. In the interests of a lighter and more punchy Bill, we could have done without it.

Part I purports to allow people to check who has sent an electronic message, ensure that it has not been tampered with and that no one has had access to it in any other way. The register will be voluntary. No provider is obliged to apply for approval and the provider who is not on the register is at liberty under the clauses within part I to provide cryptography services. I think that the Minister pats herself on the back by saying that there is a sunset clause in relation to the implementation of a statutory scheme as a last resort. She seems to hope that that will not be necessary within the five-year period.

That does not get away from the fact that there are unanswered questions on part I. First, there is no indication how we can tell whether the self-regulatory regime works. My hon. Friend the Member for Rutland and Melton has asked about that on two occasions. How will it be judged? When the Minister for Competitiveness replies, I hope that he will explain why Ministers could not publish a timetable in advance of this evening's debate for the establishment of the industry-led voluntary scheme. The Department has had a couple of years to get to grips with the matter. I would have hoped we could have more details by now.

The second unanswered question in relation to part I is the thorny issue of fees for certification, which has not been debated very much so far this evening. Fees under the industry-led scheme are still murky. The Department of Trade and Industry said that the scheme should be run on a non-profit-making basis. In its draft regulatory impact assessment, the DTI talked about the difficulties of estimating the scale of fees that approved service providers were likely to be charged. Its excuse was, "We have not determined the standards, therefore we cannot work out accreditation costs." I fail to understand why the Minister cannot give us an indication of the fees that are likely to be charged to approved providers under the industry-led scheme. It is particularly important that service providers which are small or medium-size enterprises are not deterred from seeking accreditation by the level of fees charged.

If the fees are set at a commensurate cost of accreditation—in other words, a flat rate—they may be heavily disproportionate for smaller businesses. Have the Ministers done any work at all on the case for a sliding scale of fees to be set for accreditation so as to reduce the barriers to entry for very small companies? The Department is keen to emphasise how pro-business and pro-small business it is. Let us have some answers about what it will be doing to help smaller enterprises that seek to enter the market, once the scheme is up and running.

I shall deal next with part II and the admissibility of electronic signatures. The Bill seeks to clarify the admissibility of electronic signatures in legal proceedings, while leaving it to the courts to decide what weight to assign to those electronic signatures at law. That is sensible in principle and we support it.

However, clauses 8 and 9, which introduce that, are rather a dog's breakfast. They empower Ministers through statutory instruments to amend existing statutes to allow for the use of electronic signatures and records, but the decision to allow electronic signatures and records to fulfil paper and writing requirements in existing UK statute depends on individual Ministers across all Whitehall Departments, in their own sweet time, when they feel like it, reviewing all the relevant statutory provisions under their departmental territorial jurisdiction.

As the Society for Computers and Law observed, there are an estimated 40,000 references in existing British legislation to the words "writing" and "signature". The Bill gives no indication of the time scale by which all that will be reviewed by all relevant Ministers across Departments. That is why the Government should ensure now that each Department publishes its priorities for using secondary legislation to update the definition of those words in law. The Government should also be encouraged to publish a timetable by which the review is carried out by each Department. This is too important a matter to rest on the individual priorities of Ministers—many of them hard-working, I am sure. I urge the Minister to consider the matter without delay.

Unless the Government follow the suggested course of action, businesses will be confronted with great uncertainty. They will have the regulatory burden of monitoring the haphazard introduction of amendments to existing statutes, in order to find out which statutory requirements can be satisfied by electronic writing.

In offering that modest proposal, I have the Alliance for Electronic Business on my side. The alliance was prayed in aid by Ministers earlier in the debate, and I know that the Minister for Competitiveness has a great deal of time for it. With regard to clause 8, the alliance states that statutory instruments must be put before Parliament rapidly. It goes on: Industry would be disappointed if the deadline were set later than the end of 2000. This probably means that work must begin immediately, in anticipation of passage of the Bill. The alliance continues—and this is the key point: Our member companies have a number of electronic commerce initiatives that depend upon a legal framework for electronic signatures being in place. Most importantly, the Alliance for Electronic Business states: Unless the statutory instruments are laid quickly, those initiatives cannot be implemented, reducing the growth of electronic commerce in the UK and risking the leadership that our industry currently holds in European and global markets. Conservative Members endorse the concerns of the alliance.

Has the Minister for Competitiveness done any work at all to examine the adoption of the approach which, I believe, is found in the draft Irish Electronic Commerce Act, the Uniform Electronic Transactions Act in the United States, and the Uniform Electronic Commerce Act in Canada? Those statutes apparently allow all written and paper requirements found in law to be satisfied electronically, except for a limited carve-out relating to documents representing quasi-public legal acts such as deeds and wills. Can the Minister tell us whether any work has been done by the Department which would meet the concern that I flagged up, and which the alliance has also flagged up.

Finally on part II, I am concerned about the way in which the Government view businesses' applications for Government licences or permits, when those businesses make the application using electronic writing. The Government's suggestion is that different fees might be charged for electronic communications, compared with non-electronic communications, because as we know, electronic handling of data is typically less expensive than the use of non-electronic systems. The implication from the Government is that firms and individuals who are able to communicate electronically with Government will benefit from lower fees than those reliant on pen and paper.

From a glance at last year's Finance Bill, we already know that the Revenue proposes a financial concession to those Inland Revenue taxpayers who are able to submit their tax return electronically. Do the Government propose to charge different fees for electronic and non-electronic communication? Will disadvantaged groups, who are not IT-literate or do not have access to IT, be penalised as a result? The Bill is strangely silent on that, but it is a topic that we need to discuss, if not tonight, then in Committee.

In addition, can Ministers clarify the Government's policy regarding discounts for those who use electronic communications when dealing with Government Departments—for instance, in connection with a VAT return or a corporate tax return? The DTI stated in evidence to the Select Committee: In the case of a service designed to cover its costs rather than to raise revenue, it might be appropriate for the Government to pass on its cost savings expected from the electronic handling of data to the fee payer. That is hugely important. Should we take that to mean that the Government will not treat that regime of differential discounts for those who use electronic writing in their dealings with Departments as a revenue-raising exercise? Many Opposition Members are suspicious of the Government and are worried that that may be a ruse for more Government stealth tax in this area, and that any cost savings will not be passed back to the fee payer, but will be trousered or pocketed by the Government in the process of levying fees. We will watch carefully how the Government handle the fee regime.

This is a limited Bill, the more so as part III of the draft Bill now falls to be dealt with by the Home Office. Nevertheless, the defects of the Bill before us are manifest. I trust that Opposition Members will use straightforward common sense to table amendments to remedy those defects.

8.9 pm

Dr. Stephen Ladyman (South Thanet)

It was interesting to follow the contribution of the hon. Member for Bury St. Edmunds (Mr. Ruffley). I understand the games that the Opposition must play. If the Government are over-regulating in some area, they must accuse the Government of heavy-handedness and say that they are in favour of a light touch. If the Government decide to take a minimal approach to legislation, the Opposition must accuse them of neglect, and say that a heavy approach is required. If the Government go too fast, they are being hasty. If they go too slowly, they are accused of dragging their feet.

If the Government consult and listen, they are accused of U-turns; if they consult and do not change the Bill, they are accused of arrogance. I understand these games, but this debate is unique in my experience because the Opposition have taken all six positions on the same Bill. Therefore, I am left to conclude that they know deep down that the measure is reasonable, and they are simply doing what they perceive to be their duty: opposing it on any grounds.

Before I proceed, I declare a small interest, which is in the Register of Members' Interests. I have an unremunerated directorship in a charity that provides IT training in the Thanet area. I have also had a long career in IT, and I shall say a little more about that shortly.

The Government should be congratulated on their approach to the consultation exercise. They have introduced a variety of novel methods for scrutinising legislation, including Special Standing Committees and Special Select Committees, and publishing draft Bills. The Government have consulted endlessly on the Bill that we are considering today.

Today's debate has been a bit of an anti-climax for me because when the Government published their initial proposals, I had some major anxieties about them and I imagined myself getting involved in a rebellion and fighting for change. [Interruption.] I did not mean that seriously, in case any Whips are listening. The Government have listened to every point that was made in the consultation process and the Bill is consequently benign, and is supported across the IT industry.

For most of my life, I have worked in jobs related to IT—I have spent nearly three decades in the industry. That is probably a unique record. I started learning programming when punch cards were used. When I did my research degree in the late 1970s, on the site of the National Engineering Laboratory in East Kilbride, the technology had moved on a step and we used punched paper tape. We punched our data or programmes on to paper tape and left it in specific mail boxes around the site. A lady would come round on her bicycle to collect it once a day and she would return it later. When the processing power of the computer was to be upgraded, the most cost-effective method of achieving that was by buying the lady a faster bicycle. The following year, the processing power was reviewed again, and it was decided that the best way of improving the system was to employ a younger lady.

I had a variety of jobs that involved managing and building computer networks. I built one of the first mini computer networks in the country. In the late 1980s, I introduced one of the first ethernets in the country. In those days, ethernet used a protocol called Xerox Network Software—XNS—because the Xerox corporation invented ethernet. Later, I converted it to a new-fangled piece of software called the Transaction Computing Protocol and Internet Protocol, or TCP/IP. It was probably one of the country's first intranets, but I did not realise that at the time. In the 1990s, I worked in IT management for a major pharmaceutical company. Later, I want to refer especially to my experience there.

I tell the House about these aspects of my past partly to establish my authority to speak about IT matters and to make a case for being considered as a member of the Standing Committee on the Bill. I also want to bring home the point that the pace of change in the industry has been so dramatic that the complexity of computer systems and the available processing power has increased by a factor of about 1,000 in a small part of one man's career. We cannot even begin to imagine the shape of computing if the pace of change increases by a further factor of 1,000 over the next 20 years. Can anyone begin to contemplate the future of business and IT in those circumstances?

In our deliberations on the Bill, we must be careful to include nothing that will hold back the pace of change or tie us to obsolete legislation as technology moves on. We cannot use the law to restrict the pace of technology; we can only hope that the law will harness it for us.

Mr. Gibb

Given the hon. Gentleman's experience in IT and in view of his comments, does he want part I of the Bill to be enacted, or would he prefer that it was not enforced?

Dr. Ladyman

The hon. Gentleman pre-empts one of my points. I may be alone among hon. Members in worrying about the Government's intention to allow self-regulation. I doubt whether that will do the job. As I said in European Standing Committee C recently, in my experience, many people who work in IT believe that they cannot make mistakes. They see themselves as being in total control of the technology, knowing everything about it and being able to devise systems that contain no errors or loopholes. It is only when managers become more experienced that they realise that everything has holes in it and can be overcome. Therefore, I wonder whether there is a case for the Government to prescribe who is a trusted third party, establish the rules and ensure that the third parties are policed and the system monitored. I hope that the Government are right and that the industry can devise a system for self-regulation. They are certainly right to retain the power to regulate the industry if it does not come up to scratch.

The Bill has improved greatly during the consultation process. Mandatory key escrow would have been disastrous for many reasons, not least for civil rights reasons although, as the hon. Member for Esher and Walton (Mr. Taylor) said earlier, key escrow can benefit some industries. I can envisage circumstances in which the pharmaceutical industry would find key escrow beneficial. Therefore, the Government are right not to make it mandatory, but it should remain an option for industries. We should not simply say that it has no value.

I do not believe that many industries that exist in a heavily regulated environment will support the Opposition amendment, which claims that the Bill provides for unnecessary regulation. One of my key tasks in the pharmaceutical industry was to help to devise computer systems that could manage the publication of the regulatory documents that the industry had to put together.

To get approval to sell a drug in this country, an international regulatory dossier has to be produced. In the United States, such a document is called a new drug application. An international regulatory dossier will certainly extend to tens of thousands of pages, but in the United States, where the raw data are produced for the regulatory agencies to go through and there is no process of reducing that data, documents running to hundreds of thousands of pages have to be produced. When I started work in the pharmaceutical industry, such documents were pumped out on printers and typewriters and armies of people stood at photocopiers all day long producing copy after copy after copy. One used to turn over the largest conference hall operated by the company to the collation of all that paperwork and eventually—when the 12 copies of that huge document were all bound and the 100,000 pages were in the right order and catalogued—someone would come running in and say, "I'm sorry, we've dropped a page and there is a new page 5. We have to go through the whole document again." It would then have to be put into removal vans to be taken to the regulatory agencies.

That process was obviously crying out to be computerised, which it now is. I do not know whether the same situation still pertains, but a couple of years ago— even though it was possible to produce an electronic review aid for such material called a computer-aided new drug application in the United States and a computer-assisted product licence application in this country—a paper copy of the document had to be printed out for someone to sign and authorise as the true copy. For all legal purposes, the electronic version was never the true copy.

There will be a cost saving to the industry because it will be able to produce an entirely electronic version of its regulatory documents—with an electronic signature— and use something that the House has not focused on in the debate: the ability, if one is using public and private key encryption, to encrypt an entire document. For the first time, not only will a document carry a signature on the last page saying who has produced it, but there will be a way of guaranteeing the authenticity of that document, from the title on the first page to the last full stop. That is what the industry is crying out for and the Bill's key function is to make such provision. I would not call such measures over-regulation, nor would the pharmaceutical companies and the defence industry; they represent a much-needed improvement to the way in which companies work—one that they will be able to use in the future.

The Government are also to be particularly congratulated on their work in another area. There was some talk from the hon. Member for Rutland and Melton (Mr. Duncan), the Opposition spokesman, about the complexity of the Bill's wording, but the parliamentary draftsmen have been particularly astute in clause 7. Nothing in that clause will have any detrimental effect if technology changes in the near future. If we were to use such technology now, we would probably use some form of private and public key encryption to achieve our aims, but in five years there may be a far better way of achieving them, or certainly a different way. I understand that the clause would be just as valid whatever form of technology was deployed and the Government should be congratulated on that.

The Bill should not be considered in isolation because it is not enough alone to achieve successful IT and e-commerce industries in this country. In addition, we need the regulations that are currently being considered by the European Union and were recently discussed in European Standing Committee C. Those regulations will govern such things as where a contract is made, if one is ordering from an internet site, as well as further extending the way in which we view electronic signatures. I have some concerns about the way in which that debate is developing and I believe that, in certain circumstances, internet service providers are fulfilling the role of either a retailer or a wholesaler. Sometimes, there should be a contract between a customer and the internet service provider, never mind the person who provides the goods being sold through the internet service provider. I am not entirely sure that the EU regulations have got that as clear as it ought to be.

We need this e-commerce Bill and the regulations that the EU is considering, but we also need the TrustUK hallmark, which my hon. Friend the Minister discussed earlier. I consider that to be absolutely vital. If we want customers to use an internet service to buy material, they have to have absolute trust in it. As hon. Members were speaking, I made a list of what I would look for in a site before I would send it my credit card details. I would want to know that the company had quality management and that its technical back-up and management was of an appropriate quality so that security issues would be dealt with appropriately. I would want to know about the probity of the company, its financial backing and integrity, the quality of the goods, the exchange policy for the goods and the reliability of supply. The final two issues of course, are cost and range of choice.

The only two requirements effectively available to small businesses or start-up companies would be cost and range of choice. People would not have heard of such companies, so there would be no way in which they could satisfy the first seven requirements in the mind of the customer. Companies such as Marks and Spencer are going on to the internet because they know that their brand name is a guarantee to customers. People will be prepared to shop with Marks and Spencer in a way that they would not be prepared to shop with Bloggs and Co, or any other company that might have decided to set up on the internet.

It was particularly unwise of the hon. Member for Rutland and Melton to imply that the brand name and reputation of a particular company would make it acceptable for people to trade with it in an unregulated environment. He was saying, "If you're a new business, go away; if you're a start-up company, go away; if you're a man in the street who wants to set up an internet site, go away."

Mr. St. Aubyn

Will the hon. Gentleman confirm that there are now virtual shopping malls where a business can set up shop and come under the umbrella of a recognised method of selling via the internet? When people purchase a product through the internet, they probably use a credit card. The credit card companies ultimately take the risk, because they guarantee that their customers will not get ripped off on the net. Is it not the companies at the heart of the system that are at risk, not the customer or the small guy who is trying to get on the bottom rung of the ladder?

Dr. Ladyman

The hon. Gentleman is right, and he makes a good point about shopping malls. If credit card companies guarantee products on behalf of companies operating from those malls, they will charge a commission for that service, and a small business may not want to pay that. As the hon. Gentleman said, people can pay with a credit card. I have a credit card that I use only for internet shopping, so that I can check the bill carefully and make sure that I am not being cheated. On the other hand, how many people realise that debit cards with a little Visa sign on them, which often look like other credit cards in their wallets, are not covered by the same credit protection legislation? People may shop with a debit card thinking that they are getting the protection to which the hon. Gentleman referred, but they have no protection at all. Indeed, they may be in a worse position, because their debit cards may give away bank account details to unscrupulous people. What the hon. Gentleman says is true to a certain extent, but the Conservative party has not thought out its opposition to the Bill as well as it should have done.

Dr. Palmer

I agree with my hon. Friend about the Opposition's position on new companies and the bias towards certain trade names. Does he agree that having an established brand name is not necessarily a guarantee for the customer? For instance, the Conservative party has a website. If he were to check it against his nine criteria, it would fail all nine.

Dr. Ladyman

My hon. Friend is right to remind me that not all brand names are as reliable as others.

I believe that the Government have listened to representations made to them. Had they rushed into this legislation, as some Conservatives wanted, we would have been saddled with a Bill that would have been wrong. They have done the right thing by listening, and they have adapted the Bill appropriately. As someone who is experienced in the industry, I am delighted to say that I shall support it tonight, and I hope to have further to do with the Bill at later stages.

8.31 pm
Mr. Nick St. Aubyn (Guildford)

Despite an element of partisanship in some of the remarks that we have just heard, I count it a privilege to participate in a debate in which hon. Members are so evidently knowledgable about their subject. It is a tribute to the House that we have so many Members with outside interests who are engaged at the forefront of new developments in commerce.

Like other hon. Members, I have some interests to declare. They have spurred my interest in e-commerce, and have helped me to realise the potential of this new world. I am chairman of a joinery business in the west country that has recently set up its own website. In our own small way, we see the advantages of the Bill and the development of e-commerce for our business, because it enables us to extend our network of contacts.

Through the Industry and Parliament Trust, I am currently involved in a fellowship with DHL, the international company that provides a delivery service overnight around the world from business to business and business to consumer. For that company and their many competitors, there has been a revolution in expectations and in the way in which they do business. One of the results of the growth in e-commerce is a demand for business to consumer and business to business delivery services. Those companies are set to grow rapidly.

I am privileged to represent Guildford, which is at the forefront of new technology. The town is recognised as one of Britain's leading centres for the development of software. Not only do we have access to telecom lines, but more than 60 per cent. of houses will have cable access by the end of next year as an alternative and more efficient means of reaching the new technology.

I come to this issue from a different angle. I sense that our country is on the threshold of a golden opportunity to become a centre for e-commerce in Europe, just as, 20 years ago, we had a golden opportunity to become the financial centre of Europe. We realised that under the Conservative Government, and we are now Europe's financial centre. Indeed, we are one of the world's leading financial centres. With our English-speaking world contacts and our international outlook due to our history, the key event that virtually guaranteed that we would be Europe's financial centre was the fact that, in 1979, the Conservative Government abolished exchange controls. We deregulated: we opened up this country and this city, and it became a success story in the world of finance.

What are the Government doing? They are introducing new regulation in part I, and attacking the source of future potential—the people. They are attacking the people in IT through IR35. They will drive thousands of the most able people with IT skills out of the country, and they will drive them out over a petty tax point. We want them not to spend the money that they are earning, but to accumulate it in their businesses and invest it in the future of e-commerce.

There is no comparison between someone who works in IT, earning many thousands of pounds, and someone who is an employee with all the rights and guarantees that are granted to such employees, whether that person is working in a hospital, in a school or in any other profession. Those people's jobs are on the line every day. They are negotiating for new contracts with new companies; they do not know where their bread will be buttered in two years, or one year, or, sometimes, one month. What they do know is that, if they can retain the earnings in the companies that they have set up, they can invest those earnings to enable their businesses to grow, and to ensure that this country takes the opportunity to become a centre for e-commerce in Europe.

Dr. Ladyman

Will the hon. Gentleman accept from someone who employed an awful lot of contractors in his time that, relatively, most have exactly the same rights and privileges as company employees? They are usually taken on because companies do not wish to show head counts on their accounts. There are mechanisms for avoiding costs to large companies, which have been passed on to those people. They will continue to work in this country and contribute to the IT industry even after the change.

Mr. St. Aubyn

I have no doubt that some people involved in providing IT services to companies will stay here after the implementation of IR35, but those who have the most opportunity, who are the most able, and who have the most need to retain earnings and investment to develop their businesses and the potential of e-commerce are those who will go elsewhere. It is a fast-moving environment. No one can afford to give up a competitive advantage, or to give in to what the Government are doing. The Government are telling them that they are merely employees, but in fact they are entrepreneurs at the forefront of what should be a golden opportunity.

Dr. Palmer

Will the hon. Gentleman give way?

Ms Hewitt


Mr. St. Aubyn

I want to develop my point, but I will give way to the Minister, for whom I have a great deal of respect.

Ms Hewitt

I am grateful to the hon. Gentleman. Perhaps he would care to tell us whether he endorses the advice given by at least one computing magazine to some IT sub-contractors to take from their earnings no more than just over £4,000 in the current tax year, and to take the rest in dividend payments, thus avoiding any national contributions on all their income. Does the hon. Gentleman support tax-dodging of that kind?

Mr. St. Aubyn

I am sure that the Minister would not wish to describe a perfectly legitimate exercise as tax-dodging. If she wants to prevent or discourage companies from implementing such a dividend policy, let her by all means introduce a specific rule to deal with that point, but people in the world of providing services should not be prevented from setting up companies and accumulating capital to develop bigger and more successful businesses, which is what the Minister's Government have managed to do in a cumbersome, clumsy way in introducing IR35.

Dr. Palmer

Will the hon. Gentleman give way?

Mr. St. Aubyn

No, I will take no further interventions.

The Bill is not about IR35; it is about e-commerce. Speaking to a group of Members of Parliament last week in the environs of the House, the managing director of Unilever, Mr. Richard Greenhaugh, said: We need an internet that is allowed to grow rapidly with competition restraints which are minimal. The problem with the Bill is that the competition restraints may be very real and very large.

It is not good enough for the Minister to tell us that the powers in part I of her Bill are reserve powers. We have seen the same Jekyll and Hyde trick from the Government before: they have tried to present two faces at once. We know that tonight the Minister has drunk from the bottle by her bed marked "light touch", but we also know that there is another bottle marked "regulation potion". We are very worried about when and where she will drink from that bottle and come back to the House with a very different look in her eye. We fear that she may announce, without sufficient debate, without a further Bill, and without proper consultation, that she will take a sledgehammer to this business and, in effect, drive it off our shores.

The problem with the light touch and with self-regulation is that they require strong nerves. In the fast-moving world of e-commerce, there will be occasions when people make mistakes and things go wrong. It will be easy at that time for the Minister to come to the House and to justify part I, saying that she is going to enact it. That will probably be the wrong thing to do.

There were occasions in the 1980s and 1990s when financial institutions were in trouble. They made losses. Indeed, on one or two occasions, taxpayers' money was used to prevent those losses from getting even worse, but let us compare that with the position in countries that had far more heavily regulated financial sectors. They had just as many problems. The difference was that taxpayers had to foot a much bigger bill to put them right because their Governments had said at the outset that they were responsible for ensuring that nothing would go wrong. When it did, billions of pounds, or rather billions of dollars and tens of billions of francs were spent to try to redress the mistakes of Government, not just of businesses. The danger of regulation in such a new sphere is that the Government will find that it is underwriting activities that they do not understand and cannot control until it is too late and until taxpayers' money has been taken for a ride.

Part I depends on decisions by Ministers, yet we heard criticism after criticism by the Minister of her Department just months before the Government came to office. Why is she so confident that, under her management, the Department of Trade and Industry will always get it right in the sphere of information technology and e-commerce, when she has told us how wrong its original proposals on encryption were in 1997, a point with which we agree?

Ms Hewitt

In case anyone might be misled by what the hon. Gentleman is saying, let me make the position clear. I was criticising the policy of Ministers in the previous Government. As a Minister, I take responsibility for policy decisions. As the hon. Member for Esher and Walton (Mr. Taylor), a former Minister, said earlier, my officials have always done an excellent job and, I am certain, will continue to do so. I was complaining about the policy decisions of the previous Government.

Mr. St. Aubyn

The policy of the previous Government just before the election was to issue a document for consultation and to come back with legislation. The Minister's policy is to introduce the clauses before there is any need for them and before there can be meaningful consultation about the need for part I.

Ministers do sometimes make mistakes. Our Front-Bench team has been big enough to admit that our first thoughts on the subject two and a half years ago, when the development e-commerce was a small cloud on the horizon, may have been somewhat askew. We have learned the full lesson from that mistake. The Minister and her Department have only half learned it. If they had learned the full lesson, they would never have come before the House tonight with part I.

We know about the saga in the summer with the Lord Chancellor. He gave the green light to the Brussels convention that will kill much of e-commerce's potential in Europe. If, under the convention, a business here with a customer in another European Union state were subject to the law of that state when it struck a deal over the net, that would stop it doing business with large parts of Europe. Many businesses that are happy to receive customers from Italy, Greece and other countries would think twice if they thought that the terms of contract that they had agreed would ultimately be determined by a law in Italy or Greece, rather than by one in this country. That is not to be a little Englander, but to reflect on this country's immense reputation, to which the hon. Member for South Thanet (Dr. Ladyman) alluded, for having the highest possible integrity when it comes to our system of law.

Another reason why we could become a centre for e-commerce if there is a sane system of developing the law of contract in Europe is that when people around Europe decide that they want to enter an agreement, they will want to do it under English law because they know that it will be fair to all sides. That is a good reason why we stand an excellent chance of developing a centre for e-commerce.

That will not happen if ideas such as the Brussels convention come into force. The Lord Chancellor was perfectly happy for the convention to proceed. Such misjudgments suggest that part I might be allowed to proceed on the wrong grounds and with the wrong judgment through an agreement by the Minister or one of her colleagues in the near future.

Mr. Ruffley

Has my hon. Friend wondered, as I have, whether the Minister was even notified that the Lord Chancellor's Department was going to take such action?

Mr. St. Aubyn

My hon. Friend makes an excellent point. The Minister owes it to the House to answer it. In the so-called joined-up Government, was there anything joined-up about the decision making of the Lord Chancellor's Department? Did the Lord Chancellor consult with the Department of Trade and Industry beforehand? If he did, can the Minister confirm that she agreed to his decision? What does that tell us about her competence and that of her officials in managing these important matters?

Dr. Palmer

I do not necessarily disagree with the hon. Gentleman's view that the jurisdiction should be that of the vendor, but does he agree that there is a dilemma? It is conceivable that a medium-sized firm, a large firm or a member of an industry association would feel able to deal with customers with a reasonable familiarity of the law in other countries, but it is barely conceivable that the ordinary consumer will feel comfortable with operating under the law in other countries. The logic of the hon. Gentleman's argument is that, if somebody in Greece buys something from a British company or somebody in Britain buys something from a Greek company, they must in principle be willing to accept whatever rules prevail in the other country.

Mr. St. Aubyn

I do not have a crystal ball, but I believe that the trade between countries will be primarily between businesses. Consumers will look to firms in then-own country, albeit on a website rather than in a high street shop. The hon. Gentleman's point may prove to be pretty arcane.

According to figures supplied by DHL, e-commerce was worth $45 billion in 1998 and the latest projections suggest that it will reach $1.3 trillion by 2003. That is five years ahead of the projections made by the DTI committee only a few months ago. The scene is changing very rapidly. The sector is dynamic and it has tremendous potential.

DHL also pointed out that the cachet of the "Made in Britain" label will be very strong. If the hon. Member for Broxtowe (Dr. Palmer) is right and people are hesitant about dealing outside their own jurisdiction, they might still be prepared to deal with products made in this country under contracts made in this country, because our legal system has such an excellent record of fairness to those who come to this country from outside.

Another factor is that we are very wired. The latest thorough survey shows that 40 per cent. of adults in the UK have access to the net. It is estimated that in the past month alone, 20 per cent. of all adults in this country used the net. The greatest usage is among two groups. Some 70 per cent. of 16 to 24-year-olds are on-line. The other day, I was visiting the Universities and Colleges Admissions Service headquarters in Cheltenham, where I was told that its reference bible for college courses will be a virtual manual from next year. There will not be a printed version. Everyone who wants to sign up for a college or university course will go through the net to UCAS. They will find an excellent site, where they can state their area of interest. The search engine will deliver to them all the colleges with the courses that they are looking for.

If they want to find out what sort of character is going to go to that university or college, they can call down from the database a map of Britain, showing the proportion of students coming from each part of the country. There is tremendous power in this new technology, and UCAS is at the forefront of it.

Some 70 per cent. of graduates are on-line. I am not asking the Labour party to buy the trickle-down theory, but these groups are the leaders and shakers in society and will be the spearheads of a much-wider usage. We do not need to have angst about how many people use the net today. Anyone can drop in to a net cafe in the high street and get access or an e-mail address for nothing from one of the providers. This is an accessible medium already.

As a country, we are good at taking on new technology. We have a great deal more success with mail order magazines selling new ideas than other countries in Europe. However, according to the last estimate, our consumers are two years behind those of the United States. I visited the US a month ago, and people can talk about nothing other than e-commerce; it gets a bit tiresome after a while. Nevertheless, one got the sense that consumers over there are getting plugged in. Although we are behind, it will be less than two years before this country reaches the stage that America is at today.

Britain has a golden opportunity. We have the will, the potential, the background, the reputation and the skills. We also have a driving need. The downside of e-commerce is that the world of financial services—which has brought so much prosperity to this country and this city—will be shrunk by e-commerce. Many of the services carried out today in the City of London will not exist in five years—certainly within ten years. There may be just one financial centre, if there is any need at all for a financial centre in the world. If so, it certainly would be New York.

We need something to replace the financial services economy that has motored our economy and made us all richer in the past two decades. We must not only aspire to become a centre of e-commerce. We must become a centre of e-commerce if we are to fulfil the potential of the economy. That potential was the golden legacy of the previous Government, and tonight, the Minister yet again is putting it under threat by her measures, which will impose regulation and restrictions on the power and dynamism of the British people.

8.53 pm
Dr. Nick Palmer (Broxtowe)

I wish to declare a mini-interest. I am the keynote speaker at a number of conferences on electronic commerce and its regulation. It has not happened yet, but eventually I may be paid for one or two of them.

There is a huge world market to be facilitated by legislation such as this. I will not repeat the statistics given by other hon. Members, except to note that the total number of internet users expected next year is 250 million, which is larger than the population of the United States. If one considers the attraction to a business of marketing itself to the entire American population, and then considers that this market is a larger opportunity, one can see why any business must get into this area.

The industry has given a broad welcome to the salient points of the Bill, and we are all familiar with aspects of it that were not popular. It is generally accepted that reasonable compromises have been made, and there is little appetite for delay at this point. Opposition Members gave reasons for that, which sits oddly with the rather mysterious reasoned amendment, which appears to suggest that legislation should not proceed until we have had a chance to study the interaction with European directives that are not yet entirely clear. If we were to make the amendment, it would not be possible to proceed and we would have to delay, with all the adverse consequences mentioned by both Government and Opposition Members.

It is crucial for any business, political organisation or Government dealing with the internet not merely to recreate the existing ways of working but to adapt them to the new situation. Similarly, we need to adapt the legislation. It is a broadly accepted truism that legislation on-line should be the same in most situations as legislation off-line.

That was agreed by the G8 as one of the principles and has been quoted rather glibly in many contexts, but there will be situations in which it is profoundly difficult, because if we want diverse national legislation to coincide with the equivalent on-line legislation we will require that on-line legislation differs in different countries. One of the Government's objectives should be, and I think is, to achieve sufficient convergence within European consumer protection and contract legislation to narrow the discrepancy between what is accepted in each country and what is accepted across the countries.

The Gartner group and others have worked out that there are 40,000 mentions of the words "signature" and "writing" in British legislation, and some have suggested that the Government should impose a timetable for perusing and, if necessary, correcting all those mentions, although it has not been made clear whether we should simply hold up our hands and give up if that timetable is not met.

I want to draw on the suggestion made by my hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) that we have quarterly reports from each Department on progress in implementing that mammoth task of legislative revision. It should not be left to individual Ministers to pursue it as and when time is available.

The location problem often comes up. Some groups say that the difficulty of identifying where the seller and the buyer reside makes it extremely difficult to have any rules for internet commerce based on national jurisdiction. It is not clear what jurisdiction would apply to a virtual vendor floating in cyberspace. That is a genuine problem but perhaps not so great a one as has been maintained.

An elderly couple in Beeston in my constituency called me to say that they frequently had calls requesting phone sex. A Californian company that specialised in a sex website was advertising the services of girls based in Guyana. To dial Guyana from California, one uses the dialling code 01159 and if one dials that code in Britain, one gets Beeston and my constituents. I wrote an e-mail to the company and said that it was unlikely that my constituents would send it royalties and that it was losing business. Overnight, the company changed the website to give the correct dialling code from Britain.

That example shows how international internet commerce can hit the vendor in a way he had not expected, how it can hit the buyer in a way he had not expected and how it can hit third parties, who might barely have heard of the internet. If we add to that the possibility that it is not clear whether the website operators are in California, Guyana or Britain, the problem of jurisdiction becomes clear. However, in any contract between two genuine parties, neither of whom seeks to defraud the other, it should be possible to establish the jurisdiction without great difficulty.

As a basic principle for what is unattractively called the TrustUK mark, which will become the TrustEurope mark, I suggest that people who wish to benefit from the mark should state where they are located for the purposes of jurisdiction. As the hon. Member for Guildford (Mr. St. Aubyn) suggested, people based in Germany, Honduras or Guyana might deem it desirable, for one reason or another, to base themselves in Britain for the purpose of jurisdiction—perhaps to appeal to British customers. That would be welcome.

If one of the parties seeks to defraud the other—for example, if the vendor is selling a product that does not exist or the buyer is seeking to get the product without paying for it—the indication of location may be false. That narrower problem can be specifically addressed by the police using credit companies to locate the true address of the person involved. Fraud is a specific case, and there is no need to wreck the whole principle of location and jurisdiction for that alone.

When we set the requirements for the TrustUK and TrustEurope kitemarks, I suggest that we say, first, that the location for which jurisdiction applies must be given; secondly, that if no location is given, the purchaser's location applies; and, thirdly, that it is an offence to give a false location.

I welcome the proposals and the industry as a whole, to take a realistic view of what has been said, is enthusiastic about part II. The industry is also willing to accept part I, because it recognises that it is a reasonable compromise and that the Government cannot altogether give up the possibility of legislation should self-regulation not be sufficient. I commend the Bill to the House and thank the Government for introducing it.

9.4 pm

Mr. Mark Todd (South Derbyshire)

The internet has offered numerous small companies the opportunity for development. It has been the foundation for enterprise and, although originally developed from the seed of public sector investment, has been very much the epitome and the cutting edge of free enterprise in recent history. That needs saying because it is one of the foundations on which I tend to base any thinking about the impact of legislation in this area. Based on the track record, Government should keep as far away as possible from regulatory interference in that activity. I will judge the Bill against that criterion and, although I have some qualms about the first part, I think that it will pass that test.

The internet is a vital framework for productivity improvement and for simplifying the processes between all sections of the industrial supply chain. As a number of hon. Members have said, it is a critical tool for revolutionising the efficiency of many businesses in this country and internationally. Another attraction is that it provides an extremely low entry barrier to business start-up. That is one reason why it has been the epitome of small business enterprise development: developing from nothing, businesses can be sold on the stock market for astonishing amounts and then, quite often, they disappoint those who buy them.

What is needed to make the best of this? The first principle is for the Government to step back from involvement. That is a difficult task in this country, because we tend always to consider ways in which to regulate, control and direct. That is an instinct from which we must refrain in this sector. We have seen it in the Bill's development; I commend the Government on the long consultation process. The publication of a draft Bill, careful consideration of Select Committee recommendations on two occasions and a good deal of interest in what the industry said have all helped to shape a Bill that is far better than it otherwise would have been. I agree with my hon. Friend the Member for South Thanet (Dr. Ladyman) on that. When the Bill was initially mooted, my ability to enter the Lobby to vote for it would have been tested, but that is not the case now.

Another key issue is to regard the Bill as being about information and people, not technology. When I was an IT director, I had constantly to persuade people that their obsession with how something would be solved technically should not occupy their time. The key issues were: what information did they need, and how were the people who would use that information to be trained and helped to use it most effectively? We could find solutions to the technology—that was not much of a problem. The difficulty was having the imagination to conceive the human solutions of organising a business to take full advantage of what was available. Some of the contributions to the debate have contained interesting digressions into technological aspects, but I do not believe that they are the foundations of electronic commerce in this country; they are not critical benchmarks for its success.

What else do we need? Trust and security have been mentioned as key criteria. We cannot ever have absolute trust and security—they can only be relative. My hon. Friend the Member for South Thanet ran through the criteria to consider when using a credit card. One could apply the same rules when buying over the telephone. How do we judge the difference between those two purchases? We do not know the person at the other end—he or she might record our credit card details and misuse them, or store them in an inappropriate place and abuse them. Those factors run through people's minds but they have gradually become used to the idea.

People are often driven by their trust in a brand name. That point has been made several times in this debate, and rightly so. A brand name, to me, is one of the critical indicators of trust. That is tough on small businesses, which must sell their products by other means, such as innovation, the excitement of their marketing message and strategic alliances with other businesses that can offer that trust. It is a natural instinct for customers to look for something that they can trust. That is one of the reasons why some websites are more successful at attracting people than others.

We also need flexibility. In that regard, the Bill qualifies for some solid applause. A good deal of reliance is placed on the opportunity to pass secondary legislation in due course, if that proves necessary. Normally, one would be suspicious of that approach, but in this instance it is absolutely essential and necessary. It would be demanding too much to require that time be found for more primary legislation in the future. Sensibly, the Bill gives Ministers a variety of powers to produce regulations to cover all aspects of the matter, and that is the wisest approach. The principle of flexibility has been adopted in the Bill.

Leadership by the Government is vital, as the hon. Member for Esher and Walton (Mr. Taylor) noted earlier. The Government have recognised the need for a strategy on information technology, and that is an innovation in this country. No such strategy has existed here before—a woeful omission that has led to some of the appalling IT failures of the past couple of years and before.

A clear grasp of how to organise the delivery of information technology requires that there be a relationship with Government policies, as an IT strategy must be founded on what we are attempting to put together for and deliver to our citizens. Moreover, the strategy must be founded on processes, rather than on Government Departments. The important thing is the way in which information flows across activities, rather than how it is channelled through departmental funnels. An IT strategy must be focused on citizens and not on civil servants, and on freedoms rather than restrictions.

Those are the criteria against which I shall judge the strategy when it emerges, but I welcome the commitment to produce such a strategy, which will be the foundation for effective electronic commerce in Government. That is one of the key areas: it must be possible to conduct transactions with our Government by electronic means, and the Bill sets targets for that. It states that 50 per cent. of dealings with the Government should be delivered by electronic means by 2005, and 100 per cent. by 2008.

If I were to set the benchmark in that regard, I would judge performance in terms of the reduction in all dealings with the Government. The Bill sets target dates by which certain proportions of the various Government functions should be dealt with by electronic means, but we should be ensuring that the processes of Government are made so much more efficient that it will no longer be true to say that the same information can be found in 130 different places in the Government structure. We should be able to change a piece of information at one stroke, rather than through multiple contacts. That benchmark is not contained in the Bill, but it is a critically important foundation for success.

It is clear that core standards are needed, in data storage and in the methodology by which we choose to develop systems. The foundations are still being built, but they will determine how successful we will be in delivering electronic commerce at Government level.

That we must work towards international agreement has been stressed several times in the debate and I shall not dwell on the point. However, I recall from my university days the concept of socialism in one country, and we are in danger of developing electronic commerce in one country—a rather short-term achievement. We must lay the foundations for effective trade across international boundaries.

We also need a realistic and proportionate approach to the regulatory process. That again depends on the Government having a light touch in assessing the risk of something going wrong and the need for intervention.

I have listed the key elements that we must get right. By and large, the Bill is a commendable shot at a fast-moving target. The British instinct for control and regulation has largely been restrained, and I commend the Bill to the House.

9.14 pm
Mr. Ian Stewart (Eccles)

I am pleased to be called in this debate; I apologise to the House for not being present earlier. Sadly, I had to attend the funeral of my good friend Councillor Arnie Holt. I beg the House's indulgence if I cover points made by previous speakers. I will try not to dwell on the Bill's technical aspects, which have been adequately covered, and address instead some of its wider social and educational implications.

Of the 28 Bills announced in the Queen's Speech, the Electronic Communications Bill was listed first. While its key provisions relate to e-commerce, which I expect has been the focus of this debate, its title is right because it is not just about commerce and how the United Kingdom can and should be the global leader in electronic business but about communication, the spread of knowledge and enabling the development of society in general.

Like other hon. Members who have spoken, I have a keen interest in information, communication and enabling technologies, or ICE-T as I refer to them. I have an Industry and Parliament Trust fellowship with IBM and am a member of PITCOM, the parliamentary information technology committee. With PITCOM, I have travelled to France, Canada and Japan to report on how other countries, and particularly their Governments, are harnessing new technologies for the benefit of their citizens.

I am enthused, excited and passionate not about the new technologies but about what they can and will do to assist people and enhance their lives. I am not a techie or a geek but I am very definitely a people person. I can see the opportunities and widened horizons that the new technology can deliver for people in my constituency and throughout the UK—not only opportunities for their businesses but for their education and the better delivery of local authority and Government services. My constituency is, to use census jargon, under-represented in the professional, managerial and technical social groups. I want the benefits of information, communication and enabling technologies to be available to all my constituents, not only those who own their own companies or who can afford a computer at home.

I welcome Government moves to allow public institutions such as schools, further education colleges, libraries and citizens advice bureaux to take advantage of lower rate internet access. That should allow groups such as the Salford forum for older people and the Eccles afternoon townswomen's guild, whom I met this week, access to information, both general and practical.

Three categories of transaction were defined in the Trade and Industry Committee report on e-commerce published in July: business to consumer transactions; business to business transactions; and citizen to Government transactions. The Committee reported that in the United States a fourth was found: consumer to consumer transactions, such as on-line auctions. With our local climate in Salford, they could be a welcome alternative to the early morning car boot sale. Much human activity, business, education and leisure is encompassed by this debate.

The Bill had a previous incarnation only a few months ago, since when the Government have consulted widely and amended their proposals. IBM, with which I have an IPT placement, commented: we're delighted that Ministers support an industry led approach to developing trust in emerging technologies and services. It's now down to industry to take forward its T-scheme"— the industry voluntary scheme— initiative not only to meet e-commerce requirements in the UK but also to serve as a model for countries in Europe and worldwide. In the north-west, we have been at the forefront of developments in information, communication and enabling technologies. I am the pilot MP involved in the GEMESIS—government, education, medical, industry, social information superhighway—project. It is based at Salford university and provides electronic commerce support to businesses across the north-west. As an integral part of GEMESIS, a virtual chamber of commerce, called the virtual chamber, or TVC, has been developed in conjunction with Manchester training and enterprise council, Manchester chamber of commerce and industry and Cable and Wireless. The chamber now has 140 subscribers.

Salford university plans to become a virtual university of industry for the north-west, with a special emphasis on the way in which open, distance and flexible learning can be used across a broad-band network to encourage small and medium-sized enterprises to become more innovative and wealth creating. In March, my right hon. Friend the Secretary of State for Trade and Industry visited the GEMESIS project, and praised its ground-breaking work. He pointed out that such work should be disseminated throughout the country. The recent award of an extra £1.7 million for the project—including money from the European regional development fund—will help to make that a reality.

My local authority of Salford has its own information society Portal initiative, in partnership with Oracle, called "People not Technology", to ensure that the city council, its employees and the people of Salford have the opportunity to realise the potential of technological change—to make those technologies work for them and help to improve their lives. Developments include the introduction of a city-based in-house call centre—currently operating in the environmental services directorate. In the first months of operation, responsiveness improved by more than 75 per cent. Next month, a pilot one-stop shop will open—a multi-service site with a cyber café. Salford city council has the ambitious aim of meeting the targets that the Government have set for themselves for making services available electronically—100 per cent. by 2008. The council hopes to meet those targets early.

This evening, the Manchester Evening News carried an announcement that the university of Manchester institute of science and technology is to set up a virtual business school that will bring the country's best brains together under one virtual roof.

I am a regular visitor to the digital world centre at the Lowry centre at Salford Quays—one of the landmark millennium projects. The 50,000 sq ft high-tech building will provide an important showcase for Government IT initiatives. An informative exhibition on the ground floor will be open to the public free of charge. On the first floor, meeting facilities with international high-speed, broad-band connections will be available for SMEs and progressive British companies. The programmes will be directed by the Digital World society—a collaboration of leading global IT companies.

To establish the United Kingdom as a leader in the digital world, we should establish a national centre to house our digital assets, so that they can be accessed from all over the world. That could be achieved via the digital world centre at Salford Quays. The facility will be at the hub of a broad-band network infrastructure that stretches out to schools, libraries, community centres and businesses. The UK can become the leader in a high-speed internet that will deliver full motion video throughout the world.

Of course, I have trumpeted the achievements of my locality. However I am keen to ensure that all the important projects that I described work together to ensure effective delivery of our local, national and global strategies. I continually hear the polarised arguments as to strategies: some commentators claim that local strategies are more important than global ones, and vice versa. We need both local and global strategies—perhaps we should call them "glocal" strategies. What is important is that the strategies meet our objectives to encourage maximum access for all citizens; to promote and encourage research development and implementation; and to facilitate e-commerce with minimum, but appropriate, regulation such as that provided in the Bill.

Without thought-out strategies, local economies may lose out—not just by becoming B-roads off the information superhighway, but by following traditional methods of economic development that ignore new types of activity and alliance, and new modes of learning, emerging networks and communities. Measures to address social exclusion must be central to the e-commerce debate and strategy, as should the role of a broadly defined, non-statutory sector—the so-called third sector. That is why I support organisations such as Communities on Line and Tele Cities.

The progressive use of information, communication and enabling technologies and the internet forces us to develop new ways to work and co-operate together, to promote what I call "co-opetition": the maximum co-operation between traditionally competing organisations and businesses so that they can work collaboratively towards achieving a common aim or goal—whether that be commercial, social or political.

I am delighted by the Government's bold commitment to make electronically available 25 per cent. of Government services by 2002, increasing to 100 per cent. by 2008. I am sure that other hon. Members have commented on the economic gains to the public sector of e-commerce. In September, an article in the magazine Public Finance reported on research undertaken by the IT consultancy Kable, which estimated that central and local government combined could be saving a staggering £4.1 billion a year within five years, by adopting e-commerce for services that involve financial transactions and by reducing procurement costs. That could be achieved with minimal investment.

The Bill, when implemented, will enable the UK to take its place as the best country in the world for the transaction of e-commerce. It will broaden the access for UK citizens to open up the internet. In this seemingly dry and very unglamorous Bill, we may even be at the start of remodelling our democracy. It will certainly allow us to embrace the future with confidence, commitment and creativity. People first, technology in support. I welcome the Bill.

9.26 pm
Mr. Nick Gibb (Bognor Regis and Littlehampton)

We may start on a note of agreement. The debate has been excellent, with some high-quality and well informed speeches.

The development of e-commerce is crucial to the country's future wealth and prosperity. If we embrace, encourage and liberate e-commerce, enabling Britain to be seen as a haven for e-commerce entrepreneurs, there is the very real possibility that we shall deliver enormous opportunities for people in this country.

Throughout the debate, we have been told that there are 179 million on-line users, and that that figure is estimated to rise, next year, to 250 million and by 2005 to some 350 million. In cash terms, e-commerce was worth $12 billion in 1999. Its worth will grow to between $350 billion and $500 billion by 2002 and to a staggering $1,000 billion per annum by between 2003 and 2005.

Do we want Britain to be at the forefront of those developments or to be an also-ran? Do we, as a nation, want that prosperity or should we just see how it turns out? It is unfortunate for the future of e-commerce in Britain that, at this crucial time, we have a Labour Government. However new it claims to be, although new Labour speaks the rhetoric of enterprise and a free market and deregulation, using that language in its presentation, the reality is that of traditional Labour—suspicion of business, fear of the free market, and an instinct that is always to regulate.

Several hon. Members


Mr. Gibb

I give way to the hon. Member for Ellesmere Port and Neston (Mr. Miller).

Mr. Miller

Perhaps the hon. Gentleman will explain why, if there is a huge divide between the Labour party and business, I was able to quote a long and reasonably impressive list of support from companies such as Dell and Microsoft. My hon. Friend the Member for Eccles (Mr. Stewart) mentioned IBM. Why is their support given to Labour, not the Tory party?

Mr. Gibb

Well, it is given to the Tory party on this issue. Those companies are expressing a sigh of relief that, thanks to the Conservative Opposition, who opposed the initial drafts of the Bill, they now have a Bill that they feel able to support.

We saw the regulatory tendency in the early drafts of the Bill. It is the Conservatives who really understand how entrepreneurs work and enterprise flourishes. It was the Conservatives—

Mr. White

Will the hon. Gentleman give way?

Mr. Gibb

Let me carry on; I shall give way to the hon. Gentleman later.

It is the Conservatives who understand enterprise, and it was Conservative shadow Ministers who insisted on the changes to the draft Bills that took out all the restrictions and burdens that would have killed a flourishing e-commerce sector stone dead.

In her press release, the Minister for Small Business and E-Commerce says: This historic Bill will help make the UK the best place in the world to do electronic business. Britain led the world in the first industrial revolution. Now we are determined to be winners in the new knowledge economy revolution. Britain succeeded in the industrial revolution, however, precisely because we had a laissez-faire economy by the international standards of the time. If the Government had wanted an industrial revolution in e-commerce, they should not have put in place the whole paraphernalia of state control that could come into effect under part I.

Mr. Miller

Does the hon. Gentleman not recall that the hon. Member for Esher and Walton (Mr. Taylor), pointed out in his interesting contribution that the policy for mandatory key escrow came from the Conservative party?

Mr. Gibb

Yes, and during the consultation that was begun by my hon. Friend the Member for Esher and Walton, we would have come to the conclusions that we have come to today. What is wrong with the Government is that, even after consultation, they publish Bills containing such paraphernalia. This Bill still allows for the possibility of huge state regulation.

The Government's own consultation exercise revealed deep unease in industry about these provisions. They create enormous uncertainties, so industry has called for them to be dropped altogether. Perhaps the Minister for Competitiveness could add some certainty to the issue by answering the question that the Minister for Small Business and E-Commerce failed to answer properly in response to the speech by my hon. Friend the Member for Rutland and Melton (Mr. Duncan).

Paragraph 76 of the explanatory notes states: The Government will commence Part I and set up the statutory scheme, only if self-regulation does not work. The Minister has 20 minutes to reply, so will he tell us how the Government will judge whether self-regulation does or does not work? What will the criteria be? Part I contains clauses 1 to 9, which make up 60 per cent. of the Bill. Whether part I comes into effect will depend on the answer to those questions.

The Secretary of State can implement the new regulatory regime without even a debate in the House. It can be done without any parliamentary approval whatever. That is surprising given the Government's expressed view that they always take on board Select Committee recommendations. In its report on the draft Bill, the Select Committee on Trade and Industry said: We are particularly concerned at the proposal that the order necessary to bring in part I of the Bill … should not be subject to any parliamentary procedure. We recommend that … Parliament should have the opportunity to debate and vote on the issue. Why will there be no vote?

Will the Minister explain what is meant in clause 15 by an order made by statutory instrument"? Will that statutory instrument be introduced according to the negative or affirmative resolution procedure, or will it be one that can be implemented solely by order?

In her press release, the Minister for Small Business and E-Commerce said: We are determined to get e-commerce law right and get it in fast. That is why we are introducing this Bill in the same week as the Queen's Speech. This Bill was introduced in last year's Queen's Speech, but it was not ready a year after that speech. Consequently, we have lost a year in the battle to make Britain a world haven for e-commerce. This Government, not the last one, are to blame for that.

One of the Government's defining features is their fear of confronting issues. That is why in almost all their Bills the meat of the legislation is not in the Bill, but in secondary legislation. Rarely, if ever, is that secondary legislation available before Second Reading. This 15-clause Bill contains regulatory powers in clause 2, which sets out the accreditation criteria, in clause 3, which is on the delegation of functions to an appointed individual, in clauses 5 and 8, which contain a host of regulatory powers to amend primary legislation, and in clause 10. Where are those regulations and why have the Government not published them in time for Second Reading? Will the Minister undertake that, apart from the host of regulations under clause 8, all the other regulations in the Bill will be ready by the time of the Committee stage?

We have had an interesting debate. The hon. Member for Ellesmere Port and Neston pointed out that no one in the House really knows the extent of the internet's growth. He called it an asymptotic curve. He went on to say that all good trade works on the basis of trust, and of course he is right, but that is why it is not necessary to establish this hugely cumbersome statutory framework.

Mr. Ian Stewart

Will the hon. Gentleman give way?

Mr. Gibb

No, because I am running out of time.

My hon. Friend the Member for Esher and Walton made an excellent, informed speech. I now know why his initials and his nickname are IT. He pointed out how long it has taken the Bill to gestate and said that it had made elephantine progress. He pointed out, with his usual insight, that Janet Street-Porter, who forecast no future for the internet, cannot count foresight among her many other undoubted qualities. My hon. Friend is right to point out that the uncertainty about whether internet service providers are mere carriers or are responsible for the content of the message is critical.

My hon. Friend gave us some EU intelligence from his friends at Directorate-General XV, which was very interesting, partly because we found out that he has friends at DG XV. He also urged the Government to show leadership and aim at higher targets than 50 per cent. of procurement by 2005. Why have the Government exempted Customs and Excise and the Revenue from the storage provisions in clause 8? Tax returns can be submitted by e-mail, but why cannot the measures in the Bill apply to record-keeping and deal with the requirement to keep books and records for six years?

The hon. Member for Milton Keynes, North-East (Mr. White) was right to point out the need for continual consultation on these issues. There may be many companies in the IT sector today which did not even exist when the consultation process took place in March. That was also the view of the Select Committee on Trade and Industry.

The hon. Gentleman also raised the important point about the fees that the statutory regulatory body can charge. There is nothing in the Bill that limits the level of those charges, and without such limits there is a risk that fees will become a form of taxation—or, as my hon. Friend the Member for Bury St. Edmunds (Mr. Ruffley) called it, stealth taxation—which has not been approved annually by the House.

My hon. Friend the Member for Bury St. Edmunds demanded a timetable for amending the legislation for other Departments, as provided for in clause 8. It is a pity that none of those regulations has been published at the time of the Second Reading debate. He pointed out, in an excellent speech, that it has taken two and a half years for the Government to introduce the Bill. He agreed with many hon. Members and the Law Society that part I is unnecessary. Like many other hon. Members, he alerted the House to the murky fee issue.

Dr. Ladyman


Mr. Gibb

I shall not give way because I want to finish in a couple of minutes.

Ministers must give the House some indication of what the level of fees will be. Will the Minister agree to a cap on those fees? Will he answer those questions today or in Committee?

My hon. Friend the Member for Bury St. Edmunds is right to demand a timetable for the publication of the whole raft of regulations demanded by the Bill, and those regulations should be published soon. Finally, he alerted the House to the danger of differential fees for those who struggle with IT or who need a course such as "computing for the terrified", which my hon. Friend the Member for Banbury (Mr. Baldry) said is available in his constituency.

My hon. Friend the Member for Banbury is the only member of the Select Committee who is present today—the others are in Sweden. He raised a number of important questions, including the implementation dates for the various elements of the Bill. He expressed concern about the e-envoy or tsar, a post which seems to be turning into a virtual appointment.

Turning to the speech by the hon. Member for Weston-super-Mare (Mr. Cotter), I must say that I am delighted that Liberal Democrat Front-Bench Members agree with us that part I is unnecessary and should be deleted from the Bill. I hope to see Liberal Members in the Lobby with us this evening.

The hon. Member for Stevenage (Barbara Follett) complained that e-mail is not being used by as many businesses in the eastern region as in London. She gave the figures of 57 per cent. of firms and 81 per cent. of firms respectively. If she knew her constituency businesses better, she would find that the e-mail usage in Stevenage is almost as high as in London.

The hon. Member for Sittingbourne and Sheppey (Mr. Wyatt), in a Clicksure contribution, agreed with my hon. Friend the Member for Banbury and others that part III is a bolt-on and needs wider consultation. The hon. Gentleman gave an interesting demonstration of the latest mobile phone technology, but he fails to understand that trust on the internet is better achieved by voluntary regulation than by heavy-handed legislation.

The hon. Member for South Thanet (Dr. Ladyman) spoke of the law being behind the times in respect of computer technology, but in the same breath said that he was one of the few Members of Parliament who is seriously worried about the prospect of self-regulation. In a powerful speech, my hon. Friend the Member for Guildford (Mr. St. Aubyn) pointed out that it was the ending of exchange controls in 1979 that liberated the City of London and enabled it to become the financial centre of Europe. A similarly deregulated approach, rather than the over-regulated approach set out in part I, is what is needed if Britain is to become the e-commerce centre of Europe.

The Government have missed an opportunity to create a light-touch legal regime that would have made this country a world leader in e-commerce enterprise. The Bill is late and it is flawed. The Conservatives have successfully forced the Government to remove part III of the draft Bill. We will now have to work hard in Committee to remove part I and limit the Government's regulating instinct.

If we are successful and the Government accept our amendments, we have every chance of making Britain a world leader in the e-commerce sector. The Conservative approach demonstrates our understanding of the modern world of e-commerce and global competition. For the sake of the industry, I hope that the Government will accept our amendments in Committee.

9.41 pm
The Minister for Competitiveness (Mr. Alan Johnson)

I agree with the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) that this has been a fascinating debate. Listening to it has been a humbling experience. A friend told me that replying to the debate would be as easy as falling off an analogue, but it is not, mainly because of the expertise and knowledge displayed by hon. Members on both sides of the House—albeit mostly Labour Members, I am happy to say.

Before I reply to as many of the detailed points raised as I can, I shall remind the House of the remarks made by my hon. Friend the Minister for Small Business and E-Commerce. The Bill, appropriately introduced in the last Parliament of the millennium, is central to the modernising theme of the Government's legislative programme. Modernising the law to ensure that our economy prospers in the information revolution is a huge task, but one to which we are committed. We are equally determined to create a modern Britain for the new millennium; that involves modernising government itself. In short, we are determined to create a legal and a business environment to make the UK the best place in the world to conduct electronic business.

The speeches of Opposition Members carried us into the virtual reality—indeed, the parallel universe—they occupy. At the fag-end of their 18 years in government, the Conservatives issued a consultation document that proposed mandatory key escrow and a mandatory regulation scheme; yet, today, they attempt to delay the legislation by tabling an amendment in which they suggest that the Government are over-regulating the industry.

In a thoughtful speech, my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) referred to problems in respect of electronic signatures, as did the spokesman for the Liberal Democrats, the hon. Member for Weston-super-Mare (Mr. Cotter). Incidentally, the Liberal Democrats are sitting on a virtual fence, waiting for the Government reply before deciding which way to vote. I assure both hon. Members that the Bill does not include any presumption as to whether or not a particular electronic signature is valid. It does not change the balance of proof between the consumer and suppliers: the courts will decide on the effects of a signature based on the evidence before them, just as they do today in respect of normal signatures.

The Opposition's virtual reality was momentarily illuminated by the speech of the hon. Member for Esher and Walton (Mr. Taylor), who is one of those who has a profound knowledge of the subject. The hon. Gentleman was kind enough to send me a note telling me that he was unable to be present for the winding-up speeches. He was extremely supportive of the Bill—indeed, he recanted the provisions of the document issued by the previous Conservative Government. However, in response to the points he raised, I repeat the assurance that we shall not insist on key escrow—indeed, clause 13 specifically prevents that. Orders are made under clause 8 to allow electronic communication where existing laws require paper. If providers want to offer key escrow services and people want to use them, that is entirely up to them; the Government do not intend to interfere.

The hon. Member for Esher and Walton referred to independent service providers' concerns that they may be held liable for material transmitted where they have neither knowledge of its illegality nor control over its transmission. He supports the need for legal certainty. The draft EU electronic commerce directive prohibits member states from imposing a general obligation on independent service providers to monitor the information that they transmit or store and proposes exemptions from liability for illegal content for intermediaries although it does not prevent the imposition of monitoring requirements in specific cases. We shall continue to work hard with the industry to ensure that the general issue of liability is got right in the European Union electronic commerce directive.

My hon. Friend the Member for Milton Keynes, North-East (Mr. White) referred to credit cards in another thoughtful speech. We recognise the difficulties experienced by small companies in obtaining merchant status for handling credit card transactions on-line. It is a significant barrier to the widespread adoption of e-commerce. Together with Treasury colleagues, my hon. Friend the Minister for Small Business and E-Commerce is working with Don Cruickshank's banking review to find a solution to this problem.

My hon. Friend the Member for Milton Keynes, North-East referred, as did many other hon. Members, to the cost of self-regulation and consultation. I assure my hon. Friend that fees under a statutory scheme or under the self-regulation scheme will be based on the cost of assessment and the scale of operation. This will ensure that smaller companies will not be penalised. I also give the assurance that there will be on-going dialogue between the scheme and the Government. The proposals that I have seen include a Government representative on the executive board.

The hon. Member for Banbury (Mr. Baldry) made a fascinating contribution to the debate. He was released from having to tour Sweden with the rest of the members of the Select Committee on Trade and Industry. I thought that he had gone off to Stockholm but I see him in his place. He is a Conservative Member who has some knowledge of the fundamental issues. The hon. Gentleman drew our attention to the unanimous recommendation of the Select Committee. Given that the Opposition are saying that part I is entirely unnecessary, I remind the House that the Select Committee said that it acknowledged the need for some sort of accreditation scheme for trust service providers to persuade potential users of electronic commerce that it was as safe and reliable as traditional forms of commerce but questioned whether such a scheme needed to be statutory. It recommended that the Government take powers to establish a statutory-backed scheme but hold them in reserve unused unless and until it was demonstrated that a voluntary scheme had failed to protect the interests of all consumers and service providers.

Mr. Duncan

The Minister has been asked on about five occasions what the criteria will be by which he will judge whether a statutory scheme is necessary: what are they?

Mr. Johnson

Hold steady.

The hon. Member for Banbury drew our attention to the Select Committee's recommendation, and it relates specifically to what we are doing today. We listened to the Committee and we are implementing its recommendations. The hon. Gentleman talked about the timing of bringing clause 7 into force. As he will know, it is normal to leave at least two months after Royal Assent before making a commencement order. We intend that there will be no further delay beyond that.

Mr. Duncan

What are the criteria?

Mr. Johnson

When I come to the criteria, I am sure that the hon. Gentleman will be extremely satisfied with my response.

The hon. Member for Banbury referred to the significant minority procedure and the mechanism for making deregulatory licence modifications as laid out in part III. As stated by my hon. Friend the Minister for Small Business and E-Commerce in her opening speech, the Government will bring forward amendments so that the significant minority procedure can be dropped from the Bill. The remaining deregulatory mechanism would allow fast-track licence modifications to remove regulatory burdens only if stringent tests were met.

The hon. Gentleman also raised a point about the e-envoy, a point which was also raised by the hon. Member for Bognor Regis and Littlehampton. I assure hon. Members that Alex Allen is not a virtual appointment. He was appointed by my right hon. Friend the Prime Minister in September. Although he is still in Australia he is already spending time on e-business issues. He will pick up the reins full-time in January and among other duties will be responsible for implementing the recommendations in the PIU—performance and innovation unit—report on electronic commerce.

My hon. Friend the Member for Sittingbourne and Sheppey (Mr. Wyatt) raised the matter of international activity. We are supporting activity through the EU, the Organisation for Economic Co-operation and Development and the United Nations to develop common standards, but if we wait for such standards to be finalised, we will be the last to benefit. We want to lead, and we believe that self-regulation offers a flexible way of doing that.

In a fascinating contribution with props provided, my hon. Friend also asked about voice signature. I can reassure him that voice signature is indeed an electronic signature, within the terms of our Bill.

The hon. Member for Bury St. Edmunds (Mr. Ruffley) referred to ideas for carve-out—another example of terminology—which would permit the electronic alternative to paper to be introduced across the board, with some exceptions. As it stands, the Bill adopts a case-by-case approach, but we are already studying the hon. Gentleman's idea and we expect to have more to say about it in Committee.

Clause 8 does provide the power to charge different fees for electronic and paper transactions, and there is no question of the Government pocketing the savings, but we will need to consider the position of the socially excluded. The Bill is flexible and Ministers may view their areas of responsibility differently. No doubt we will return to the point in Committee.

While I have time, let me draw attention to the criteria being set for regulation. [HON. MEMBERS: "Aha!] This should be no surprise to Opposition Members. We published a detailed set of criteria in July. Do they not read such documents? It was mentioned by my hon. Friend the Minister for Small Business and E-Commerce when she introduced the debate.

The document states: The Government believes any scheme should have the following characteristics: The scheme should be wide enough to cover a broad range of services including signature and confidentiality services.

The scheme should be demonstrably rigorous, impartial and trusted by all sectors of industry … It should not act as a barrier to new entrants to the market"— that was one of the suggestions that we heard from the Opposition— The scheme should have a means of taking into account the views of consumers. The scheme needs effective mechanisms for ensuring compliance with these standards"— including a number of examples set out in the report. Finally: The scheme should take account of the draft EU Electronic Signatures Directive … In particular, it should provide UK providers with a means of showing that their signature service meets the standards envisaged in the draft directive". Those criteria have been published, they are clear to the industry and they have been repeated for the benefit of the Opposition.

I do not have time to refer in detail to all the other contributions, but they were fascinating. In a shameless bid for a place on the Committee, my hon. Friend the Member for South Thanet (Dr. Ladyman) made one of the most thoughtful contributions. He described his experience of working in the industry over a number of years, and I am sure that we all benefited from hearing his comments. He pointed out that the wording of clause 7 is technologically neutral, which ensures that developments in new technology will not affect the provisions of the Bill.

My hon. Friend the Member for Stevenage (Barbara Follett) pointed out what a godsend the internet is to women who have family responsibilities and work unsocial hours, especially at this time of the year. In another thoughtful contribution, my hon. Friend the Member for Broxtowe (Dr. Palmer) welcomed the Bill. He was enthusiastic about part II and recognised the need for reserve powers in part I. My hon. Friend the Member for South Derbyshire (Mr. Todd) supported the Bill, and commended the extensive consultation and the changes that we made to the Bill as a result of that.

Those are all Members whose knowledge of these matters far exceeds mine. They contributed to an immensely informed debate.

The hon. Member for Bognor Regis and Littlehampton asked about the procedure for a commencement order under part I. There is no provision in the Bill for alternative or negative procedure for the commencement order. That is in accordance with normal procedure for such statutory instruments.

Mr. Gibb


Mr. Johnson

I do not have time to give way.

The situation in respect of the Inland Revenue and Customs and Excise will be dealt with under the Finance Act 1999, not under the Bill.

Several hon. Members


Mr. Johnson

I am not giving way. We hope that part I will not be brought into force, so there is no need to present draft statutory instruments yet. We shall report on progress on self-regulation. Clause 8 orders have to cover many Acts and we intend to propose some alternative structure.

Mr. Duncan


Mr. Johnson

I will not give way.

I do not need to emphasise the importance of our proposals; hon. Members have done that during the debate. There may be differences in our views, but we all agree that trust and confidence are essential. Therefore, it is bizarre that the Opposition amendment tries to prevent the establishment of that trust. The industry would not develop a self-regulatory scheme for trust service providers if it believed that that would damage its prospects.

Mr. Duncan


Mr. Johnson

I am not giving way. We are adopting the unanimous recommendation of the Select Committee on Trade and Industry and the hon. Member for Esher and Walton—I am pleased that he has resumed his seat—recanted on Opposition proposals. I shall remind the House of the industry's views. Microsoft says that the publication of the Bill provides a model for the rest of Europe to follow. Keith Chapple, the managing director of Intel UK, said: We are delighted that government has confirmed in the Bill that key-escrow is off the agenda and is focusing on the real issue of legal recognition of electronic signatures". Carl Symon, chief executive officer of IBM said: IBM welcomes the introduction of this important measure and hopes that it will become law very early in the new Millennium. Keith Todd, the chief executive of ICL plc said: This is good news … This new sense of partnership between industry and Government"— he refers specifically to part I— will make the UK a great place for electronic commerce. The list continues with Cisco Systems, AOL and BT, which said: BT supports the government aim of creating an environment of trust and confidence in UK e-commerce. Legal recognition of digital signatures and writing on a non-discriminative basis, is an important step in this procedure.

Mrs. Angela Browning (Tiverton and Honiton)

We have received conflicting advice on clause 15. The Minister said that there would be no statutory instrument whereas his colleague said that a statutory instrument would be introduced. Will the Minister clarify that?

Mr. Johnson

I said that we would follow the usual procedure, but we cannot say now whether the negative or the positive resolution procedure will be used.

Today's debate will not be the last in which we discuss electronic issues. We all agree about the importance of the electronic revolution and our need to embrace it. It touches all our lives. Indeed, many schoolchildren are probably more adept than us at dealing with the technologies and thus better placed than politicians to discuss their potential.

The Bill could be the first measure to become law in the 21st century. Although it will not transform our lives overnight, it makes an important start on the transformation that will happen in the future and I commend it to the House.

Mr. Gibb

By leave of the House—

Hon. Members


Question put, That the amendment be made:—

The House divided: Ayes 128, Noes 319.

Division No. 5] [9.59 pm
Ainsworth, Peter (E Surrey) Lloyd, Rt Hon Sir Peter (Fareham)
Ancram, Rt Hon Michael Llwyd, Elfyn
Arbuthnot, Rt Hon James Loughton, Tim
Atkinson, Peter (Hexham) Luff, Peter
Baldry, Tony Lyell, Rt Hon Sir Nicholas
Bercow, John McIntosh, Miss Anne
Beresford, Sir Paul MacKay, Rt Hon Andrew
Blunt, Crispin Maclean, Rt Hon David
Body, Sir Richard McLoughlin, Patrick
Boswell, Tim Madel, Sir David
Bottomley, Peter (Worthing W) Malins, Humfrey
Bottomley, Rt Hon Mrs Virginia Maples, John
Brady, Graham Mates, Michael
Brazier, Julian Maude, Rt Hon Francis
Browning, Mrs Angela Mawhinney, Rt Hon Sir Brian
Butterfill, John May, Mrs Theresa
Cash, William Moss, Malcolm
Clappison, James Nicholls, Patrick
Clark, Dr Michael (Rayleigh) O'Brien, Stephen (Eddisbury)
Collins, Tim Ottaway, Richard
Cormack, Sir Patrick Page, Richard
Cran, James Paice, James
Davies, Quentin (Grantham) Paterson, Owen
Davis, Rt Hon David (Haltemprice & Howden) Pickles, Eric
Prior, David
Day, Stephen Redwood, Rt Hon John
Duncan, Alan Robathan, Andrew
Duncan Smith, lain Robertson, Laurence
Emery, Rt Hon Sir Peter Roe, Mrs Marion (Broxbourne)
Evants, Nigel
Faber, David Rowe, Andrew (Faversham)
Fabricant, Michael Ruffley, David
Fallon, Michael St Aubyn, Nick
Flight, Howard Sayeed, Jonathan
Forth, Rt Hon Eric Shephard, Rt Hon Mrs Gillian
Fowler, Rt Hon Sir Norman Shepherd, Richard
Fox, Dr Liam Simpson, Keith (Mid-Norfolk)
Fraser, Christopher Spelman, Mrs Caroline
Garnier, Edward Spicer, Sir Michael
Gibb, Nick Spring, Richard
Gill, Christopher Stanley, Rt Hon Sir John
Gillan, Mrs Cheryl Steen, Anthony
Gorman, Mrs Teresa Streeter, Gary
Gray, James Swayne, Desmond
Green, Damian Tapsell, Sir Peter
Greenway, John Taylor, Ian (Esher & Walton)
Grieve, Dominic Taylor, John M (Solihull)
Hamilton, Rt Hon Sir Archie Taylor, Sir Teddy
Hammond, Philip Tredinnick, David
Hawkins, Nick Tyrie, Andrew
Heathcoat—Amory, Rt Hon David Viggers, Peter
Horam, John Walter, Robert
Howard, Rt Hon Michael Wardle, Charles
Hunter, Andrew Waterson, Nigel
Jack, Rt Hon Michael Wells, Bowen
Jackson, Robert (Wantage) Whitney, Sir Raymond
Jenkin, Bernard Whittingdale, John
Key, Robert Wilkinson, John
King, Rt Hon Tom (Bridgwater) Winterton, Mrs Ann (Congleton)
Kirkbride, Miss Julie Winterton, Nicholas (Macclesfield)
Laing, Mrs Eleanor Woodward, Shaun
Lait, Mrs Jacqui Yeo, Tim
Lansley, Andrew
Leigh, Edward Tellers for the Ayes:
Letwin, Oliver Mr. Geoffrey Clifton-Brown
Lewis, Dr Julian (New Forest E) and
Lidington, David Mr. Oliver Heald.
Abbott, Ms Diane Cunningham, Jim (Cov'try S)
Ainger, Nick Darting, Rt Hon Alistair
Ainsworth, Robert (Cov'try NE) Darvill, Keith
Alexander, Douglas Davey, Valerie (Bristol W)
Allan, Richard Davidson, Ian
Allen, Graham Davies, Rt Hon Denzil (Llanelli)
Anderson, Donald (Swansea E) Davies, Geraint (Croydon C)
Anderson, Janet (Rossendale) Dawson, Hilton
Armstrong, Rt Hon Ms Hilary Dean, Mrs Janet
Ashton, Joe Denham, John
Atherton, Ms Candy Dismore, Andrew
Atkins, Charlotte Donohoe, Brian H
Austin, John Doran, Frank
Baker, Norman Dowd, Jim
Ballard, Jackie Drew, David
Banks, Tony Dunwoody, Mrs Gwyneth
Barnes, Harry Eagle, Angela (Wallasey)
Battle, John Eagle, Maria (L'pool Garston)
Bayley, Hugh Edwards, Huw
Beard, Nigel Efford, Clive
Beckett, Rt Hon Mrs Margaret Ellman, Mrs Louise
Bell, Stuart (Middlesbrough) Ennis, Jeff
Benn, Hilary (Leeds C) Fearn, Ronnie
Bennett, Andrew F Field, Rt Hon Frank
Benton, Joe Fisher, Mark
Bermingham, Gerald Fitzpatrick, Jim
Betts, Clive Fitzsimons, Lorna
Blackman, Liz Flint, Caroline
Blears, Ms Hazel Follett, Barbara
Blizzard, Bob Foster, Rt Hon Derek
Boateng, Rt Hon Paul Foster, Michael Jabez (Hastings)
Borrow, David Foster, Michael J (Worcester)
Bradley, Keith (Withington) Galloway, George
Bradshaw, Ben Gapes, Mike
Brinton, Mrs Helen Gardiner, Barry
Brown, Russell (Dumfries) Gerrard, Neil
Browne, Desmond Gibson, Dr Ian
Burden, Richard Gilroy, Mrs Linda
Butler, Mrs Christine Godsiff, Roger
Cable, Dr Vincent Goggins, Paul
Campbell, Alan (Tynemouth) Golding, Mrs Llin
Campbell, Mrs Anne (C'bridge) Gordon, Mrs Eileen
Campbell, Ronnie (Blyth V) Griffiths, Jane (Reading E)
Campbell—Savours, Dale Griffiths, Win (Bridgend)
Cann, Jamie Grocott, Bruce
Casale, Roger Grogan, John
Caton, Martin Hain, Peter
Cawsey, Ian Hall, Mike (Weaver Vale)
Chapman, Ben (Wirral S) Hall, Patrick (Bedford)
Chidgey, David Hamilton, Fabian (Leeds NE)
Clapham, Michael Hanson, David
Clark, Rt Hon Dr David (S Shields) Harman, Rt Hon Ms Harriet
Clark, Dr Lynda (Edinburgh Pentlands) Harvey, Nick
Heal, Mrs Sylvia
Clarke, Charles (Norwich S) Healey, John
Clarke, Eric (Midlothian) Heath, David (Somerton & Frome)
Clarke, Rt Hon Tom (Coatbridge) Henderson, Doug (Newcastle N)
Clarke, Tony (Northampton S) Henderson, Ivan (Harwich)
Clelland, David Hepburn, Stephen
Clwyd, Ann Heppell, John
Coaker, Vernon Hesford, Stephen
Coffey, Ms Ann Hewitt, Ms Patricia
Cohen, Harry Hill, Keith
Coleman, Iain Hodge, Ms Margaret
Connarty, Michael Hope, Phil
Cook, Frank (Stockton N) Hopkins, Kelvin
Corbyn, Jeremy Howarth, Alan (Newport E)
Corston, Jean Howarth, George (Knowsley N)
Cousins, Jim Howells, Dr Kim
Cranston, Ross Hoyle, Lindsay
Crausby, David Hughes, Ms Beveriey (Stretford)
Cryer, John (Hornhurch) Hughes, Simon (Southwark N)
Cummings, John Humble, Mrs Joan
Cunningham, Rt Hon Dr Jack (Copeland) Hurst, Alan
Hutton, John
Iddon, Dr Brian Pendry, Tom
Illsley, Eric Pickthall, Colin
Jackson, Helen (Hillsborough) Pike, Peter L
Jenkins, Brian Plaskitt, James
Johnson, Alan (Hull W & Hessle) Pollard, Kerry
Johnson, Miss Melanie (Welwyn Hatfield) Pond, Chris
Pope, Greg
Jones, Rt Hon Barry (Alyn) Powell, Sir Raymond
Jones, Helen (Warrington N) Prentice, Ms Bridget (Lewisham E)
Jones, Jon Owen (Cardiff C) Prentice, Gordon (Pendle)
Jones, Martyn (Clwyd S) Purchase, Ken
Kaufman, Rt Hon Gerald Quin, Rt Hon Ms Joyce
Keeble, Ms Sally Quinn, Lawrie
Keen, Alan (Feltham & Heston) Radice, Rt Hon Giles
Kelly, Ms Ruth Rammell, Bill
Kemp, Fraser Reed, Andrew (Loughborough)
Kennedy, Jane (Wavertree) Rendel, David
Khabra, Piara S Roche, Mrs Barbara
Kidney, David Rogers, Allan
Kilfoyle, Peter Rooker, Jeff
King, Andy (Rugby & Kenilworth) Rooney, Terry
King, Ms Oona (Bethnal Green) Ross, Ernie (Dundee W)
Kirkwood, Archy Rowlands, Ted
Kumar, Dr Ashok Roy, Frank
Ladyman, Dr Stephen Ruane, Chris
Lawrence, Mrs Jackie Ruddock, Joan
Lepper, David Russell, Bob (Colchester)
Leslie, Christopher Salmond, Alex
Levitt, Tom Salter, Martin
Lewis, Ivan (Bury S) Sanders, Adrian
Lewis, Terry (Worsley) Sarwar, Mohammad
Liddell, Rt Hon Mrs Helen Savidge, Malcolm
Linton, Martin Sawford, Phil
Livingstone, Ken Sedgemore, Brian
Lloyd, Tony (Manchester C) Shaw, Jonathan
Love, Andrew Sheerman, Barry
McAvoy, Thomas Sheldon, Rt Hon Robert
McCartney, Rt Hon Ian (Makerfield) Simpson, Alan (Nottingham S)
Singh, Marsha
Macdonald, Calum Smith, Rt Hon Andrew (Oxford E)
McDonnell, John Smith, Angela (Basildon)
McKenna, Mrs Rosemary Smith, Jacqui (Redditch)
Mackinlay, Andrew Smith, John (Glamorgan)
McNulty, Tony Smith, Llew (Blaenau Gwent)
McWilliam, John Smith, Sir Robert (W Ab'd'ns)
Mahon, Mrs Alice Snape, Peter
Mallaber, Judy Soley, Clive
Marsden, Gordon (Blackpool S) Spellar, John
Marsden, Paul (Shrewsbury) Squire, Ms Rachel
Marshall, David (Shettleston) Starkey, Dr Phyllis
Marshall-Andrews, Robert Steinberg, Gerry
Martlew, Eric Stevenson, George
Meale, Alan Stewart, David (Inverness E)
Merron, Gillian Stewart, Ian (Eccles)
Michie, Bill (Shef'ld Heeley) Stinchcombe, Paul
Milburn, Rt Hon Alan Strang, Rt Hon Dr Gavin
Miller, Andrew Straw, Rt Hon Jack
Mitchell, Austin Stringer, Graham
Moonie, Dr Lewis Stuart, Ms Gisela
Morgan, Ms Julie (Cardiff N) Stunell, Andrew
Morley, Elliot Sutcliffe, Gerry
Morris, Rt Hon Ms Estelle (B'ham Yardley) Taylor, Rt Hon Mrs Ann (Dewsbury)
Mountford, Kali Taylor, Ms Dari (Stockton S)
Mullin, Chris Temple-Morris, Peter
Murphy, Denis (Wansbeck) Timms, Stephen
Murphy, Jim (Eastwood) Tipping, Paddy
Murphy, Rt Hon Paul (Torfaen) Todd, Mark
Naysmith, Dr Doug Touhig, Don
O'Brien, Bill (Normanton) Trickett, Jon
O'Brien, Mike (N Warks) Truswell, Paul
Olner, Bill Turner, Dennis (Wolverh'ton SE)
Organ, Mrs Diana Turner, Dr Desmond (Kemptown)
Osborne, Ms Sandra Turner, Dr George (NW Norfolk)
Palmer, Dr Nick Turner, Neil (Wigan)
Pearson, Ian Twigg, Derek (Halton)
Twigg, Stephen (Enfield) Willis, Phil
Tynan, Bill Wills, Michael
Walley, Ms Joan Winnick, David
Ward, Ms Claire Winterton, Ms Rosie (Doncaster C)
Wareing, Robert N Wood, Mike
Watts, David Woolas, Phil
Worthington, Tony
Webb, Steve Wright, Anthony D (Gt Yarmouth)
Welsh, Andrew Wright, Dr Tony (Cannock)
White, Brian Wyatt Derek
Whitehead, Dr Alan
Wicks, Malcolm Tellers for the Noes:
Williams, Alan W (E Carmarthen) Mr. Kevin Hughes and
Williams, Mrs Betty (Conwy) Mr. David Jamieson.

Question accordingly negatived.

Main Question put forthwith, pursuant to Standing Order No. 62 (Amendment on Second or Third Reading), and agreed to.

Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).

  2. c120
  3. ESTIMATES 30 words
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  10. c121
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    2. DENTISTS 25 words
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    4. JUSTICES OF THE PEACE 31 words
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  13. COMMITTEES 12 words
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    2. AGRICULTURE 19 words
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    4. CATERING 18 words
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    6. DEFENCE 19 words
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    10. HEALTH 18 words
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    12. SCOTTISH AFFAIRS 34 words
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    14. SOCIAL SECURITY 32 words
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    16. TREASURY 27 words